Fingers are crossed that the real estate market will give homebuyers some relief this year. But will things change? Only time will tell.
Currently, there are signs that market conditions are improving. Mortgage rates have come down to the mid-six percent range, and some potential buyers have jumped back into the market. However, there’s still a crazy amount of pent-up demand, which could put even more pressure on housing prices.
This also means that we could see more new homes hit the market! Builder confidence surged as mortgage rates fell, and single-family starts are expected to grow in 2024 to add much-needed inventory to the market.
Want the latest real estate news? Here’s my housing update for January 2024!
The median existing-home price for all housing types was $382,600 in December, up 4.4% from December 2022, according to the National Association of Realtors (NAR). This was the sixth consecutive month of year-over-year price increases. The national housing inventory dropped 11.5% from the previous month to one million at the end of December, per NAR data, or to about 3.2 months’ supply at the current monthly sales pace.
New construction fared better at the end of 2023. The National Association of Home Builders reported that new home sales bounced back in December, and the median new home sale price was $413,200, down 13.8% compared to a year ago.
On an annual basis, existing sales slid at the end of 2023 by 1% and by 6.2% from the previous year, reaching its lowest level in nearly 30 years. Despite this, NAR Chief Economist Lawrence Yun is still optimistic.
"The latest month's sales look to be the bottom before inevitably turning higher in the new year," said Yun. "Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months."
Mortgage rates for a 30-year fixed-rate mortgage are in the mid-six percent range. According to Freddie Mac, rates have remained in a very narrow range over the last month. Given this stabilization, potential homebuyers with affordability concerns have jumped back into the market. The government-sponsored enterprise anticipates a busier spring homebuying season than in 2023.
The DC, Maryland, and Northern Virginia housing markets are similar to what’s being experienced nationwide. According to the Northern Virginia Association of Realtors December market statistics data, the median home price was up 12.5% compared to the year before, reaching $675,000 in the NVAR region. Home sales were also down by 16.3%, and there’s currently only 0.7 months’ worth of inventory.
The DCist predicts fewer sales and rising prices for 2024, stating that the NAR lists the DC-Arlington-Alexandria housing market as tenth in the country for most pent-up housing demand. However, this means sellers hold a lot of equity, and the DCist stated that these changes are expected to have a very modest effect on incentivizing new construction.
Sales of newly built, single-family homes in December increased by 8% from November. Annually, sales were up 4.2%. Alicia Huey, chairman of the NAHB, said the new home sales rate last month was fueled by a lack of existing inventory in the resale market and falling interest rates. The rise also coincides with recent builder surveys which showed an increase in future sales expectations, Huey added.
While this is a promising sign, Danushka Nanayakkara-Skillington, NAHB’s assistant vice president for forecasting and analysis, says long-term issues, such as a shortage of buildable lots, a lack of skilled labor, and excessive regulations, will pose challenges for builders.
As of January 25, 2025, the mortgage rate for a 30-year fixed-rate mortgage is 6.69%, and homebuyers have responded. Foot traffic, or the number of properties shown by Realtors, increased by 5% year-over-year in December, NAR reported. Mortgage applications were also up 3.7% from the week prior.
Although recent consumer price data shows that inflation rose on a 12-month basis to 3.4% in December, the Federal Reserve is expected to hold its policy rate steady; however, financial markets still anticipate rate cuts beginning in March.
There’s some dispute on how much rates will decrease in 2024, but here are interest rate predictions for Q1 2024:
The FHFA Purchase-Only Home Price Index revealed that as of October of 2023, home prices rose 6.1% year to date, according to Freddie Mac’s January 2024 Economic, Housing and Mortgage Market Outlook report. However, as more buyers enter the market amidst low housing inventory, home prices could go up.
The report noted that the demand for housing will remain high largely because of millennial first-time buyers looking to buy homes. Freddie Mac expects home prices to increase by 2.8% in 2024 and 2% in 2025 nationally.
“Obviously, the recent, rapid three-year rise in home prices is unsustainable.,” Yun said. “If price increases continue at the current pace, the country could accelerate into haves and have-nots.”
Mortgage rates have come down, but pent-up demand and limited inventory could reaccelerate home price increases in 2024.
Prospective homebuyers have jumped back into the market as affordability improves thanks to lower mortgage rates. The Fannie Mae Home Purchase Sentiment Index increased 2.9 points in December to 67.2 as more consumers expect mortgage rates to go down over the next 12 months. Home buying conditions are still overwhelmingly pessimistic, and only 17% of consumers indicate that it’s a good time to buy a house.
But lower inventory could also incentivize homebuilders. HousingWire reported that builders are primed for an even better 2024 after new construction grew to compromise about 30% of total housing inventory in 2023 — more than double in a normal year.
Homeowners have also told Fannie Mae that high mortgage rates are the top reasons why it’s both a bad time to buy and sell a home, but the positive mortgage rate outlook could entice some to list their homes for sale.
Nothing is certain, but it looks like 2024 will be another exciting year in real estate!
Stay up to date on the latest real estate trends
March 1, 2024
Living in Great Falls, VA
March 1, 2024
January 31, 2024
January 31, 2024
Living in McLean, VA
January 1, 2024
January 1, 2024
Luxury Real Estate Photography
November 30, 2023
November 30, 2023
How to Properly Price Your Home
October 30, 2023
How To Prepare Your Home For Sale
Whether you’re buying or selling a home (or both), your success hinges upon the expert advice and services provided by your real estate agent. I’m committed to providing my clients with professional services based on my experience, knowledge and skills.