Mortgage rates will remain higher for longer,
falling to 6.4% by year-end
NORTH BETHESDA, Md.,
June 27,
2024 /PRNewswire/ -- Affordability will be the
biggest challenge for the housing market for the remainder of 2024,
and will keep overall home sales more muted than had been expected,
according to the Bright MLS Housing Market Forecast Update released
today. Although mortgage rate lock-ins will continue to keep some
would-be sellers on the sidelines, life events have led others to
sell, leading to a rise in housing inventory in most regions across
the country.
"As we head into the second half of 2024, the good news for the
housing market is on the supply side. While there is still a big
gap between pandemic-era and current mortgage rates, new listing
activity has been increasing. Changes in personal and family
circumstances are leading some homeowners to sell despite the
persistently highly interest rate environment," Lisa Sturtevant, Bright MLS Chief Economist,
said. "With prospective homebuyers still facing record high home
prices in some markets and mortgage rates that will remain in the
high 6's for most of the year, affordability is now the biggest
challenge in the market. It will force some buyers to delay
their homeownership plans into 2025 or even 2026."
Revised 2024 U.S. Housing Forecast
|
Bright MLS Updated
Forecast
(June 2024)
|
Bright MLS
Forecast
(Nov. 2023)
|
|
2024
Forecast
|
Change
2023-2024
|
2024
Forecast
|
2023
Historical
|
Existing Home Sales
(000s)
|
4,160
|
1.7 %
|
4,602
|
4,090
|
Median Sales Price
($)
|
397,600
|
2.0 %
|
394,200
|
389,800
|
End of Year Inventory
(000s)
|
1,128
|
13.9 %
|
1,277
|
990
|
Mortgage Rates
(Q4)
|
6.4
|
0.4 pp
|
6.2 %
|
6.8 %
|
pp = percentage points
Affordability weakens buyer demand
Prospective homebuyers are still facing mortgage rates that will
remain in the high 6's for most of the year. Affordability is now
the biggest challenge in the market and will keep some prospective
buyers sidelined this year. In 2019, a homebuyer needed an income
of about $67,000 to purchase the
median-priced home in the U.S. Five years later, in 2024, as both
home prices and mortgage rates have increased substantially, a
homebuyer now needs an income of more than $120,000 to afford the median-priced home.
Inventory is improving, but still low
Even with inventory growing nearly 14% by year-end, it is still
low by historical standards. The housing market will end the year
with 20% fewer homes for sale than 2019, which means that while
buyers will have more leverage, it is still technically a seller's
market.
Home price growth is a mixed-bag
Prices have risen strongly in the first half of 2024, but home
price growth is expected to slow in the second half of the year.
More supply and cooler demand will lead to less upward pressure on
home prices. Although there are no signs of a major home price
correction in the U.S., median prices will fall year-over-year in
some markets where demand is weakening and inventory has increased
significantly.
Revised 2024 Mid-Atlantic Housing Market Forecast
|
Bright MLS Updated
Forecast
(June 2024)
|
Bright MLS
Forecast
(Nov. 2023)
|
|
2024
Forecast
|
Change
2023-2024
|
2024
Forecast
|
2023
Historical
|
Existing Home
Sales
|
220,732
|
1.3 %
|
239,300
|
217,844
|
Median Sales Price
($)
|
397,570
|
3.3 %
|
390,052
|
385,000
|
End of Year
Inventory
|
34,308
|
24.3 %
|
38,800
|
27,592
|
The Mid-Atlantic housing market is something of a microcosm of
the larger U.S. housing market, and 2024 forecasts for the region
generally track in line with the U.S. outlook.
More affordable markets drive home price growth
There
are some pockets of the Mid-Atlantic region where homes are
relatively affordable and local economic conditions remain strong.
In some of these more affordable markets, home prices will continue
to rise briskly in 2024, while price growth in some higher-cost
markets will slow. Overall, the median home price in the
Mid-Atlantic will rise by 3.3% in 2024, a slower pace of home price
appreciation than last year, but closer to the longer-term
average.
Greater inventory gains in the Mid-Atlantic
At the end
of 2024, the supply of homes available for sale is expected to be
up by 24.3% ,compared to the end of 2023. Inventory is growing
slightly faster than the U.S. overall with more new listings and a
slightly slower pace of home sales activity. Despite the increase,
inventory is still more than 30% lower than it was at the end of
2019.
To view Bright's full 2024 housing forecast update, please
visit: brightmls.com/research
Methodology: Bright's forecast is based on analysis of
historic data from the National Association of Realtors and Freddie
Mac, as well as weekly listing data from Altos Research, and takes
into account economic and demographic factors that will drive
housing demand and supply in 2024.
About Bright MLS
Bright MLS was founded in 2016 as a collaboration between 43
visionary associations and two of the nation's most prominent MLSs
to transform what an MLS is and what it does, so real estate pros
and the people they serve can thrive today and into our data-driven
future through an open, clear and competitive housing market for
all. Bright is proud to be the source of truth for comprehensive
real estate data in the Mid-Atlantic, with market intelligence
currently covering six states (Delaware, Maryland, New
Jersey, Pennsylvania,
Virginia, West Virginia) and the District of Columbia. Bright MLS's innovative
tool library—both created and curated—provides services and
award-winning support to well over 100K real estate professionals, enabling their
delivery on the promise of home to over half a million home buyers
and sellers monthly. Learn more at BrightMLS.com.
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SOURCE Bright MLS