2024 Housing Market Will Spice Up The Year!

real estate Jennifer Ferrara January 12, 2024

The Big Story

The 2024 Housing Market Will Spice Up The Year!

 

As of December 4, 2023, interest-rate futures traders (the people who make a lot of money being right about where rates will go) expect the Fed to cut the federal funds rate, which currently falls between 5.25% and 5.50%, by 1.25%.

The falling sales in 2023 have allowed inventory to grow, which is much needed. Although inventory is still down 6% year over year, it has increased 20% in 2023 and will likely continue to increase through the rest of the year, which is far different from the typical seasonal trend of increasing in the first half of the year and declining in the second. In Q1 2024, we expect inventory to rise further, helping ease the low supply problem. Greater supply will be necessary because mortgage rates should decrease meaningfully with the anticipated rate cuts, driving up demand. A 1% decrease in interest rate equates to a 10% decrease in monthly financing costs. At this point, we expect a large number of would-be buyers to wait a little longer to gain more clarity around rate cuts in 2024 and hit the market in the spring and summer months.

Different regions and individual houses vary from the broad national trends, so we’ve included a Local Lowdown below to provide you with in-depth coverage for your area.

 

LOCAL DATA:

  • The median single-family home and condo prices declined across most Texas markets in November. Greater Austin is notable in that the median single-family home and condo prices hit a two-year low, which could easily attract potential buyers in the near future.
 
 
  • Active listings and sales fell month over month. However, in 2023, inventory in Texas’s major metro areas have increased meaningfully. Rising inventory is only good for the housing market, which is likely to experience much higher demand in 2024.
 
 
  • Months of Supply Inventory has risen over the past five months, indicating the market has shifted in buyers’ favor. It’s common for MSI to trend higher in the fall and winter, when fewer buyers are in the market and sales slow.
 
 

Unlike 2023, 2024 inventory has a much better chance of following more typical seasonal patterns. The falling sales in 2023 have allowed inventory to grow, which is much needed. Although inventory is still down 6% year over year, it has increased 20% in 2023 and will likely continue to increase through the rest of the year

As demand slows, buyers are gaining slightly more negotiating power and paying less than asking price on average, but buyer competition will ramp up meaningfully in the spring, which will create price support.


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