Real Estate Market Update: March 2024

There’s good news this month! 

Mortgage rates have eased slightly, and existing home sales had the largest monthly increase in a year! The steady increase in housing supply has also helped to satisfy demand. Builder confidence has also improved, and single-family starts have reached their highest level since April 2022.

We’re in the busy spring homebuying season, so we should continue to see elevated buying and selling activity. I don’t see the housing market slowing down, at least not yet!

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

March Housing Market Trends

This month’s housing market update has been more positive than previous months. Here’s what’s changed.

Existing Homes

In February, the median existing-home price for all housing types was $384,500, an increase of 5.7% from the same month the year before, according to the National Association of Realtors (NAR). This is the eighth consecutive month of year-over-year price gains.

Existing home sales jumped 9.5% in February, the largest monthly increase in a year. NAR Chief Economist Lawrence Yun says the additional housing supply is helping to satisfy the strong market demand. Housing demand has been steadily increasing due to population and job growth, Yun added. However, the timing of purchases will be determined by mortgage rates and inventory choices.

New Construction Homes

New home sale prices aren’t much higher than existing home prices. According to the National Association of Home Builders (NAHB), the median new home sale price in February was $400,500, down 3.5% from January and down 7.6% compared to a year ago. 

A recent rise in mortgage rates led to a flat reading for new home sales. Carl Harris, chairman of the NAHB, says that as mortgage interest rates subside this year, we should see more homebuyers enter the market and new construction will need to meet this demand.

Housing Inventory

By the end of February, total housing inventory was up 5.9% from January and 10.3% from a year ago. At the current sales pace, unsold inventory is at a 2.9-month supply, down from 3 months in January but up from 2.6 in February 2023.

Mortgage Rates

After climbing to almost 7% again last month, mortgage rates have come slightly down. As of March 28, the interest rate on a 30-year fixed-rate mortgage was 6.79%. According to Freddie Mac, improving inventory and lower rates have allowed more prospective buyers to enter the market. As markets watch for signs of cooling inflation, rates may hopefully come down further.

DC Housing Market

Things are slowly getting better in the D.C., Maryland, and Northern Virginia housing markets!

According to the Northern Virginia Association of Realtors' February 2024 market statistics data, the median home price was up 11.8% compared to the year before, reaching $687,250 in the NVAR region. The home price appreciation is great news for homeowners who are thinking about selling their homes. 

In the DMV, the average days on market dropped to 22 days, down 31.3% from the prior month. The NVAR noted that buyers' growing urgency will continue to drive competition among sellers, possibly resulting in higher offers and faster sales cycles.

Total volume increased massively, up 16.3% to an impressive $841 million, indicating a substantial increase in real estate transactions. NVAR said this is a sign of the continued strength of the DMV market.

Building a House vs. Buying

New construction homes may cost more than existing ones, but not by much. Also, it may be easier to build your home rather than find one on the market that matches all of your wants and needs.

According to the NAHB, pent-up demand, moderating interest rates, and low housing inventory have pushed single-family starts in February to their highest level since April 2022.

Housing starts increased by 10.7% in February and 35.2% year-over-year. The NAHB also pointed out that the rise coincides with rising builder sentiment. According to the NAHB/Wells Fargo Housing Market Index (HMI), builder sentiment is at its highest level since July 2023 and marks the fourth consecutive monthly gain.

The NAHB expects more buyers to jump off the sidelines and into the marketplace if mortgage rates continue to fall this year. Even with strong pent-up demand, builders continue to face supply-side challenges, including low availability of buildable lots and skilled labor. New restrictive codes have also increased building costs.

When Will Mortgage Rates Go Down?

Mortgage rates have stayed within the mid-6% range for 16 weeks, said Jessica Lautz, NAR’s deputy chief economist and vice president of research. Despite remaining at elevated levels, housing market experts expect mortgage rates to pull back over 2024, especially once the Federal Reserve begins interest rate cuts, Forbes reported.

The Federal Open Market Committee (FOMC) voted unanimously to leave the benchmark rate unchanged after its March meeting. This is the fifth consecutive meeting that the FOMC has kept its policy rate steady between 5.25% and 5.5%.

Still, the Fed maintains its three planned rate cuts for 2024, but Fed Chair Jerome Powell stated that the timing of the rate cuts will depend on more inflation data.

However, Eric Orenstein, senior director at Fitch Ratings, explained to HousingWire that experts are now beginning to lose confidence that mortgage rates will fall enough to drive meaningfully higher origination volume in 2024. Still, loan volumes should normalize with lower rates.

Are Home Prices Dropping?

Freddie Mac’s March 2024 Economic, Housing and Mortgage Market Outlook report shows that home prices are showing strength, even outpacing overall consumer prices.

Freddie Mac expects upward pressure on home prices to remain as first-time buyers continue to flood a market dealing with low supply. The government-sponsored entity predicts home prices to increase by 2.5% in 2024 and 2.1% in 2025.

The outlook is optimistic, but inflation could drag on longer than anticipated, and deteriorating credit quality could eventually hurt housing demand.

Housing Market Predictions 2024

We’ve seen some improvements over the past month. Builders are gaining confidence and there’s been a substantial increase in home sales, showing that there’s still plenty of pent-up demand. Higher home prices present affordability challenges to buyers, but there’s no better time to be a homeowner.

Buyers may get some relief as mortgage rates come down. In a recent State of the Union address, President Biden proposed a new tax credit that could provide $10,000 to first-time homebuyers and a separate $10,000 tax credit to homeowners who sell their starter home in order to purchase a large house.

We should continue to see big changes in the real estate market as we continue into spring, the housing market’s busiest season. “The week of April 14-20 is expected to have the ideal balance of housing market conditions that favor home sellers, more so than any other week in the year,” according to Realtor.com. So if you plan to sell soon, start prepping now!

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