How strong will the Spring housing market be?
Altos Research released its first report focused on the 2024 housing market. Their initial prediction indicates a 15% improvement in home sales with home prices ticking upwards slightly by the end of the year.
Home inventory at the start of the year is 6% higher than it was at the start of 2023. There are currently more options available on the market to homebuyers, which bodes well for inventory levels for the spring. However, home prices are holding steady, which indicates that there are enough buyers willing to purchase at current levels to support prices where they’re at.
The only concern is that inventory isn’t spread evenly throughout the country. Markets in the Southern and Midwestern regions are climbing, but the Western and Northeast parts of the U.S. have fewer homes available.
Where could home prices fall?
A recent article from Business Insider detailed 34 metro areas that could see home prices fall in 2024. It may come as a bit of a surprise but several markets in pandemic-era hotspots have the potential to dip this year.
Which markets came in at the top of the list? San Jose, CA and New Orleans, LA took the top two spots. San Jose is predicted to see a 6.1% dip, while experts are predicting a 6.0% drop for New Orleans. Multiple markets in California made it into the top ten. San Francisco came in third place, Los Angeles was ninth, and Sacramento ended up in 10th place.
Are current mortgage rates pulling buyers back in?
A monthly consumer survey from Fannie Mae indicated that Spring homebuying season may have started early. Supply is still tight in most metro areas, but the recent drop in mortgage rates appears to have gotten some homebuyers off the sidelines.
Mark Palim, a deputy chief economist at Fannie Mae, said, “This significant shift in consumer expectations comes on the heels of the recent bond market rally. Notably, homeowners and higher-income groups reported greater rate optimism than renters.”
When it comes to home inventory, Palim stated, “Homeowners have told us repeatedly of late that high mortgage rates are the top reason why it’s both a bad time to buy and sell a home, and so a more positive mortgage rate outlook may [incentivize] some to list their homes for sale, helping increase the supply of existing homes in the new year.”
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