Real Estate with Tim Sharkey 

A Challenging Spring for Home Buyers: Insights from Sharkey Real Estate

July 8, 2024
Tim Sharkey, Founder - Sharkey Real Estate

What many had hoped would be a rosy spring home-buying season ended as a thorny challenge for many prospective home buyers already demoralized by a frustrating market. Elevated mortgage rates and home prices led to stalled sales, but there was a silver lining—more resale inventory entered the market, putting downward pressure on the pace of home price growth.

Additionally, the median price for a new home has fallen below the median resale home price, with builders offering incentives to attract buyers. However, experts agree that the housing market will only gain renewed momentum once mortgage rates drop enough to ease affordability obstacles and incentivize homeowners with low rates to move.

Housing Market Forecast for 2024

Despite high mortgage rates, out-of-reach home prices, and sluggish sales, experts insist the housing market will improve. The delay in this transformation is due to inflation taking its time to cool off, delaying the Federal Reserve from cutting the federal funds rate. Mortgage rates indirectly track this benchmark interest rate, and with it at its highest level in over two decades, borrowers are feeling the impact on their ability to afford a home.

U.S. home prices posted an annual 6.3% gain in April, according to the S&P CoreLogic Case-Shiller Home Price Index. This is a slight slowdown from the 6.5% gain in March but still a record high. Experts expect that a Fed rate cut will help stimulate the housing market, but it remains unclear when—and if—even a single cut will occur in 2024.

Will the Housing Market Finally Recover in 2024?

For a housing recovery to occur, several conditions must unfold. Keith Gumbinger, vice president at online mortgage company, states, “For the best possible outcome, we’d first need to see inventories of homes for sale turn considerably higher. This additional inventory would ease the upward pressure on home prices, leveling them off or perhaps helping them to settle back somewhat from peak or near-peak levels.”

Mortgage rates would also need to cool off, which seems promising given recent declines. The average 30-year fixed mortgage rate trended down in June and early July, coming in at 6.95% for the week ending July 3.

However, Gumbinger advises against hoping for rapidly falling rates. He explains, “Rapidly falling rates could create a surge of demand that wipes away any inventory gains, causing home prices to rebound. Better that rate reductions happen at a metered pace, incrementally improving buyer opportunities over a stretch of time, rather than all at once.”

Mortgage rates returning to a more “normal” upper 4% to lower 5% range would help the housing market return to 2014-2019 levels. Yet, Gumbinger predicts it could be a while before we return to those rates.

At Sharkey Real Estate, we are committed to helping you navigate these challenging times. Whether you are buying or selling, our expert team is here to provide you with the guidance and support you need. Stay tuned for more updates and insights as we continue to monitor the housing market trends for 2024.