Real Estate Market Update: April 2024

We’re in peak homebuying season, but higher mortgage rates and home prices continue to keep would-be buyers on the sidelines. Nevertheless, purchase demand is still there, and experts predict market conditions will slowly improve.

Most buyers believe sellers hold all the cards in the current market, but we’ve recently seen more price cuts on homes. This isn’t anything to worry about. Instead, it suggests that sellers are more willing to negotiate with buyers!

Read on for the latest real estate news for April 2024.

April Housing Market Trends

We’re seeing improvements in housing supply, but mortgage rates have started to rise again. Here’s what’s changed.

Existing Homes

According to the National Association of Realtors, the median existing-home price for all housing types was $393,500 in March, 4.8% higher than in March 2023. This is the ninth consecutive month of year-over-year price gains and the highest price ever recorded for March.

Existing-home sales dropped 4.3% in the same month. NAR Chief Economist Lawrence Yun noted that home sales are stagnant because interest rates have slightly increased. However, we’re still seeing demand thanks to nearly six million more jobs than before the pandemic, Yun said. This suggests that there are more aspiring homebuyers in the market.

New Construction Homes

The median new home sale price in March was $430,700, up nearly 6% from February and down 1.9% year-over-year, according to the National Association on Home Builders (NAHB).

New construction home sales rose 8.8% in March, but the NAHB said that the pace of new home sales will be under pressure as mortgage rates shifted higher this month. This is expected to moderate sales and increase the use of build incentives this spring. 

Housing Inventory

The inventory of existing homes increased by 4.7% from February to the end of March. At the current sales pace, this is the equivalent of 3.2 months’ supply. New single-family inventory was also up 2.6% from February, representing an 8.3 months’ supply at the current building pace.

Mortgage Rates

According to Freddie Mac's Primary Mortgage Market Survey, the interest rate on a 30-year fixed-rate mortgage was 7.17% as of April 25, 2024. Although rates have increased more than half a percent since the first week of the year, purchase demand remains steady, Freddie Mac pointed out.

DC Housing Market

So far, the spring D.C., Maryland, and Northern Virginia housing markets have been challenging. 

According to the Northern Virginia Association of Realtors (NVAR) March 2024 market statistics data, the median home price in the NVAR region was up 9.8% compared to the year before. That’s a $42,750 increase in one year.

The average days on market was 16 days, a 27.3% decline, and housing inventory is down by 14.6%. New listings are also down 13.8%.

New listings have been slow to come onto the market in the metro area, and mortgage rates remain elevated. Buyers who wait for mortgage rates to come down before jumping into the market may find more inventory but face increased competition.

Building a House vs. Buying

Homebuyers will still have better luck finding or building a new construction home versus finding an existing home in their local market. An April survey also revealed that 22% of builders cut new home prices that month and 57% of builders offered sales incentives.

Housing starts did fall in March as interest rates moved higher after the latest inflation data failed to show any improvements. The NAHB also said builders are facing higher supply-side costs and tighter lending conditions.

Overall, housing starts decreased by 14.7% in March, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Carl Harris, chairman of the NAHB, said higher interest rates are raising the cost of housing for buyers and raising development and construction costs for builders. Shelter inflation is also rising faster than overall prices.

Builder sentiment is still positive but remained flat in April. The NAHB said the potential for demand growth is there, but buyers are hesitating until interest rates make a notable move.

When Will Mortgage Rates Go Down?

Mortgage rates are above 7% again amid new inflation data. According to Business Insider, this has led some to think the Federal Reserve may not cut rates at all this year, which would keep mortgage rates elevated for longer than anticipated.

Despite this, most major forecasts believe that mortgage rates will trend down later this year. Investors believe the Fed may start to cut rates in September, but only if inflation shows signs of slowing. If not, we may not see any drops until 2025.

Are Home Prices Dropping?

Home prices aren’t dropping across the board, but home price cuts were at their highest level in March since 2019, according to Realtor.com. The percentage of homes with price cuts hit 15% in March 2024, suggesting sellers are more willing to negotiate with buyers.

“A growing share of price reductions shows that even though buyers may feel that sellers hold all of the cards in today’s housing market, more sellers are willing to adjust their expectations more often than is typical for this time of year,” said Realtor.com chief economist Danielle Hale.

Hale also explained that sellers are driven by a combination of acceptance and unwillingness to put off decisions any longer, such as a family or job situation change. Additionally, home prices are expected to move sideways. Hale expects to see the usual price increase from spring into summer but not the big jumps we saw over a year ago.

Housing Market Predictions 2024

Mortgage rates are back up again, but it hasn’t slowed down purchase demand. However, many prospective buyers are being priced out of the housing market. 

Freddie Mac’s April 2024 Economic, Housing and Mortgage Market Outlook report expects the economy to hold steady as we enter Q2 2024 and slowly grow throughout the remainder of the year. The report indicated that the Federal Reserve is in a “wait and see” mode before cutting the federal funds rate. Freddie Mac expects mortgage rates to remain elevated for longer.

Even so, the outlook is still positive. We aren’t heading towards a housing market crash, and inventory has been slowly improving. The housing market has recently seen some ups and downs, but we’re heading toward a healthy recovery.

Are you looking to buy or sell in the DC area? Don’t navigate the housing market alone! Reach out today for expert real estate leadership.