The housing market in 2024 is expected to see high home prices and lower mortgage rates later in the year, providing some relief for hopeful homebuyers. With housing market conditions easing somewhat, it’s essential for potential buyers to start preparing early to take advantage of these upcoming changes.
In July 2024, the average home value in the U.S. was $362,481, with a 3.3% year-over-year increase, according to Zillow. At the same time, the average 30-year mortgage rate, per Freddie Mac, was 6.85%. These high home prices and mortgage rates have posed challenges for homebuyers in recent years, making it difficult for many to enter the market.
Several key factors are influencing housing market trends in 2024. These include inflation, high mortgage rates, and low housing supply. Inflation, which reached record highs in 2022, led the Federal Reserve to raise the federal funds rate, pushing mortgage rates up. However, with inflation slowing down, the Fed is expected to lower its benchmark rate multiple times this year, potentially leading to a decrease in mortgage rates.
Low housing inventory remains a significant issue, with the U.S. facing a shortage of 4.5 million homes. This scarcity has driven up home prices and rent costs, making it challenging for buyers to find affordable housing. However, experts predict that mortgage rates will drop in 2024, improving affordability for borrowers. Despite this, high demand is expected to keep home prices high and potentially push them even higher.
While there are concerns about a housing market crash in 2024 due to the rapid increase in home prices, it is unlikely to occur. The U.S. housing market’s lack of inventory is a key factor preventing a crash, as prices are likely to continue rising in the absence of sufficient supply.
For potential homebuyers looking to enter the market in 2024, there are several tips to prepare for homeownership. These include getting finances in order, exploring affordable mortgage programs and down payment assistance, timing the purchase right, avoiding rushing into a decision, and building savings for unexpected costs.
Overall, while the housing market in 2024 may present challenges such as high home prices and mortgage rates, there are opportunities for buyers to navigate these conditions and achieve their homeownership goals. By preparing early and staying informed about market trends, prospective buyers can position themselves for success in a competitive housing market.