Realtor.com’s 2024 Midyear National Housing & Economic Forecast offers intriguing insights into the housing market for the remainder of the year. Here’s a summary of the key points and their implications for buyers, sellers, and the broader economy.

2024 Midyear Housing Market Forecast: Essential Insights

Mortgage Rates: A Slight Improvement

Concerns about a potential recession seem to be easing as the economy shows resilience, leading to a slight adjustment in mortgage rate forecasts. The average mortgage rate for 2024 is now projected to be 6.7%, down from the earlier forecast of 6.8%. By the end of the year, rates are expected to drop further to around 6.3%.

What’s causing this dip? Anticipations that the Federal Reserve might begin lowering its Federal Funds rate in 2024, which typically leads to lower mortgage rates.

What does this mean for you? If you’re considering buying a home, this could be a positive development as we move toward 2025.

Home Price Appreciation: Strong Performance

Initially, there was an expectation of a slight decline in home prices. However, the updated forecast now predicts a 4.6% increase in home prices for 2024, reversing the earlier projection of a -1.7% decrease. This shift highlights the resilience of the U.S. economy, which continues to perform well despite higher interest rates.

What’s fueling this growth? The robust U.S. economy and ongoing home supply shortages are driving up prices.

What should sellers know? The market remains favorable for them, though the rate of price increase might slow down as the year progresses.

Home Sales: Gradual Increase

Home sales are not expected to see a dramatic increase. The forecast estimates a modest 0.8% rise in home sales, reaching about 4.1 million for the year. This would be the second-lowest annual total since 2012.

What’s limiting sales? Despite improvements in inventory, affordability remains a major issue. The recent rise in mortgage rates, even if temporary, has exacerbated affordability problems.

Expectations? The market is likely to remain balanced, without significantly favoring buyers or sellers.

Inventory: A Positive Change

Good news for buyers—housing inventory is projected to increase significantly. Initially expected to decline by 14%, inventory is now forecasted to rise by 14.5% in 2024.

What’s driving this shift?

• More Sellers Entering the Market: Some sellers who were waiting for better mortgage rates are now listing their homes.
• Longer Listing Periods: Homes are staying on the market longer, leading to a buildup in inventory.

What does this mean? More inventory means more options for buyers, which could reduce competition and enhance their negotiating power.

Economic Context: A Delicate Balance

The U.S. economy is navigating a complex landscape. Inflation, while easing, remains a concern. The Federal Reserve is watching the situation closely, with potential rate cuts anticipated later in the year.

Key Economic Indicators:

• Inflation: The Fed’s preferred inflation measure (PCE) is still above the 2% target but has shown signs of slowing.
• Job Market: The labor market is strong, with steady, though slower, job growth compared to earlier in the year.
• Consumer Spending: A strong job market is supporting consumer spending, which remains a bright spot in the economy.

2024 Housing Forecast: A Comparative Overview

Housing Indicator	Realtor.com 2024 Forecast REVISED	Realtor.com 2024 Forecast (Nov. 2023)	2023 Historical Data
Mortgage Rates	Average 6.7% throughout the year, 6.3% by end of year	Average 6.8% throughout the year, 6.5% by end of year	Average 6.8%, 6.6% at end of year
Existing-Home Median Sales Price Appreciation	+4.6%	-1.7%	+1.1%
Existing-Home Sales	+0.8% 4.1 million	+0.1% 4.07 million	-18.7% 4.09 million
Existing-Home for-Sale Inventory	+14.5%	-14.0%
Single-Family Home Housing Starts	+10.5% 1.0 million	+0.4% 0.9 million	-5.0% 0.9 million
Homeownership Rate	65.5%	65.8%	65.9%
Rent Change	-0.5%	-0.2%	+11.8%

What Does This Mean for You?

If you're a prospective homebuyer, experienced investor, or just curious about the real estate market, these insights provide important guidance. Grasping the market dynamics can help you make well-informed choices that align with your financial objectives.

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