Expert weighs in on where prices could land
The average price of a home in the US is likely to post an increase of around 3-4% next year, according to House Buyers of America founder and CEO Nick Ron.
Still, Ron said price appreciation is likely to slow at some point in the coming year in email comments shared with GOBankingRates.
“The slowdown will be due to a combination of factors such as rising interest rates, an increase in the supply of homes, a decrease in demand, and affordability challenges for buyers. That said, I’m not anticipating a drop in prices nationwide,” he said.
Ron further said that the rising costs in construction and the slowing economy because of the prolonged high interest rates will impact the housing market in 2024.
The state of the US housing market
The number of homes that were actively for sale fell by 2% year-over-year in October, as recorded by Realtor.com data. The number of unsold homes fell by 3.7% while there were 3.2% fewer newly listed homes.
The national median list price fell from $430,000 in September to $425,000 in October. Listing prices were notably influenced by the scarce inventory. While there was an increase in new home sales, the number of homes being constructed was not enough to bridge the gap of low housing supply.
Ron expected that there will be increases in the housing inventory in the next year. However, he also believed that the shortage will continue until 2030.
“Due to the estimated pent-up demand for housing, it will take time for the nation’s builders to find suitable land, skilled labor, and materials to create a much-needed supply. Innovation in regulatory technology can also help increase the supply of housing and make it easier to build new homes faster,” explained Ron.
As of November 9, the average 30-year fixed mortgage rate in the US was 7.50%, according to the Federal Reserve. High rates were expected to last for a while even as the pace of interest rate increase slowed down.
“Sometime in the first half of next year mortgage rates will be slightly lower, but still elevated. As the economy decelerates, rates should go down,” said Ron.
The executive also indicated that the Federal Reserve is likely to eventually start lowering rates at some point in 2024 as inflation declines and unemployment increases. He said that the rates will continue to be high enough that buyers will face affordability challenges while sellers will be more reluctant to give up their low existing rates.
He also expected that 2024 will be a seller’s market due to the shortage in housing, possibly leading to a shift in how people looking for a house will purchase homes.
“I expect to see more buyers join with friends and family members to purchase homes, as intergenerational households, grown children boomeranging homes, and families created from friendships increasingly pool multiple income sources to purchase homes and avoid the uncertainty of housing costs as renters,” he said.
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