What to expect from the housing market in the second half of 2024, according to real estate experts

Consultants are torn about the place precisely the housing market is headed within the latter half of the yr.

“Principally, we predict the housing market goes to enhance over the subsequent half of the yr,” Glenn Kelman, chief govt of Redfin, an actual property brokerage website, stated on a Might 22 look on CNBC’s “Cash Movers.”

“We have hit all-time low within the first quarter of 2024 and I’d anticipate the housing market to perform a little bit higher,” Kelman stated.

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Different specialists are much less positive in regards to the market’s prospects for enchancment.

“It is a very unusual market, and it is form of onerous to foretell,” stated Jeff Ostrowski, a housing analyst at Bankrate.com.

Listed below are a few of what Ostrowski, Kelman and different actual property specialists say may form the true property market within the second half of 2024:

The mortgage price lock-in impact appears to be carrying off, stated Orphe Divounguy, senior economist at Zillow.

The mortgage price lock-in impact, or the golden handcuff impact, stored any householders with extraordinarily low mortgage charges from itemizing their houses final yr as they did not wish to finance a brand new house at a a lot increased rate of interest. 

Throughout the week ending June 1, newly listed houses grew 2.1% from a yr in the past, in response to a weekly housing traits report by Realtor.com. In the identical interval, accessible stock of houses on the market grew 35.5% in contrast with final yr, Realtor.com discovered.

In his CNBC look, Kelman additionally identified that demand for homeownership stays excessive, particularly amongst patrons who’ve been laying aside the house buy for a very long time.

Whereas the market is seeing extra listings, the increase in provide will not be sufficient to draw patrons, in response to Doug Duncan, senior vice chairman and chief economist at Fannie Mae.

“Listings have trended usually upward of late, suggesting to us {that a} rising variety of present householders can not delay transferring,” stated Duncan in a launch earlier this month. “Nonetheless, we imagine the continuing affordability challenges are prone to weigh on how rapidly these new listings convert to precise gross sales.”

The 30-year fastened price mortgage slid 6.99% on June 6 after climbing 7.22% on Might 20, in response to Freddie Mac information through the Federal Reserve.

“Mortgage charges are down a bit from Might highs, however that hasn’t spurred a surge of competitors amongst patrons within the housing market,” Divounguy stated.

Affordability stays a high precedence for patrons and charges stayed above 7% for lengthy.

Many specialists imagine the Federal Reserve will probably maintain rates of interest within the upcoming board assembly on June 12. Nonetheless, the Nationwide Affiliation of Realtors forecast a possible rate of interest reduce by the autumn of this yr, in response to Jessica Lautz, the NAR’s deputy chief economist.

By late September, “maybe we’ll begin seeing motion on the Fed funds price,” she stated. “That is at the very least what our hope is.”

Whereas mortgage charges are forecasted to return down to six.5% within the fourth quarter, homebuyers might not see a lot reduction given rising house costs amid restricted housing stock, famous Lautz.

“It’s extremely attainable that they are ending up paying the identical mortgage cost as a result of they’re buying a house that whereas has a decrease rate of interest, has the next worth level,” she stated.

Whereas the housing market has slowed by way of the variety of transactions, costs have not soften regardless of broader expectations, Ostrowski defined.

The median house sale worth throughout the U.S. elevated to $392,200, a 4.4% leap from a yr earlier, in response to Redfin.

“It is onerous to foresee costs actually cooling or declining nationally,” stated Ostrowski. “It appears probably we will see one other file excessive for house costs this summer season.”

Some metropolitan areas within the U.S. have seen costs soften. Residence-sale costs declined 2.9% in Austin and 1.2% in San Antonio and Fort Value, Texas, in response to Redfin information. Residence costs cooled 0.9% in Portland, Oregon, the agency famous.

Nonetheless, many of those areas noticed main worth progress in the course of the Covid-19 pandemic, with costs leaping as a lot as 45%, stated Lautz. Consumers may not see a lot reduction in affordability regardless of latest worth declines given these pandemic-era runups.

About 90% of metro markets posted house worth positive factors in 2024, in response to NAR information. Whereas worth factors could also be softening in some native markets, the “overwhelming majority of markets are seeing house worth progress,” stated Lautz.