Experts are torn about where exactly House market is heading towards the second half of year.
“Most of us think the housing market will improve in the next half year,” said Glenn Kelman, chief executive officer of Redfin, a real estate brokerage website. Appears May 22 on CNBC’s “Money Movers.”
“We bottomed out in the first quarter of 2024 and I expect the housing market to get a little better,” Kelman said.
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Other experts are less certain about the market’s improving prospects.
“It’s a very strange and unpredictable market,” said Jeff Ostrowski, a housing analyst at Bankrate.com.
Here are some of the things Ostrowski, Kelman and other real estate experts say could shape the real estate market in the second half of 2024:
More and more homes are hitting the market
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The mortgage rate lock-in effect appears to be fading, said Orphe Divounguy, senior economist at Zillow.
Mortgage rate lock effect, or the golden handcuff effect that kept any homeowner with extremely low mortgage rates from listing their home last year because they didn’t want to finance a new home with much higher interest rates.
In the week ending June 1, new home listings increased 2.1% from a year ago, according to according to Realtor.com’s weekly housing trends report. During the same period, the number of available homes for sale increased 35.5% compared to last year, Realtor.com found.
During his appearance on CNBC, Kelman also pointed out that demand for homeownership remains high, especially among buyers who have delayed purchasing a home for a long time.
Although the market is seeing more listings, the increase in supply is not enough to attract buyers, according to Doug Duncan, senior vice president and chief economist at Fannie Mae.
“There has been an overall upward trend in listings of late, suggesting that a growing number of existing homeowners can no longer delay their move,” Duncan said in a report. liberate, release, free in the first day of this month. “However, we believe ongoing affordability challenges may impact how quickly these new listings convert into actual sales.”
‘Some movement’ in interest rates
According to Freddie Mac data through the Federal Reserve, 30-year fixed-rate mortgages fell 6.99% on June 6 after rising 7.22% on May 20.
“Mortgage rates are down a bit from their May peak, but that hasn’t prompted increased competition among buyers in the housing market,” Divounguy said.
Affordability remains the top priority for buyers and rates have remained above 7% for long periods of time.
Many experts believe that the Federal Reserve will likely leave interest rates unchanged at its upcoming board meeting on June 12. However, the National Association of Realtors forecasts the possibility of a rate cut this fall, according to Jessica Lautz, NAR’s deputy director of economics. .
By the end of September, “we will probably start to see movement in Fed interest rates,” she said. “At least that’s what we hope.”
While mortgage rates are forecast to fall to 6.5% in the fourth quarter, homebuyers may not see much relief from rising home prices amid limited housing supply, Lautz noted.
“They will most likely end up paying the same mortgage because they are buying a home with a lower interest rate but a higher price tag,” she said.
‘It’s hard to foresee prices really cooling down’
While the housing market has slowed in terms of transaction volume, prices have not dropped despite broader expectations, Ostrowski explained.
According to Redfin, the median home sale price across the United States increased to $392,200, up 4.4% from a year earlier.
“It’s difficult to predict prices actually cooling or falling nationwide,” Ostrowski said. “It looks like we will see record high home prices this summer.”
Some metropolitan areas in the US have seen prices fall. Home sales prices fell 2.9% in Austin and 1.2% in San Antonio and Fort Worth, Texas, according to to Redfin data. Home prices cooled 0.9% in Portland, Oregon, the company noted.
However, many of these areas have seen sharp price increases during the Covid-19 pandemic, with prices increasing as much as 45%, Lautz said. Buyers may not see much support for affordability even though prices have dropped recently due to spikes during the pandemic.
About 90% of urban markets announce house price increases by 2024, according to to NAR data. While home prices may be falling in some local markets, “the vast majority of markets are seeing home price increases,” Lautz said.
