Will the pendulum finally swing in homebuyers’ favor in 2024? Redfin certainly thinks so.
“Signs point to a shift toward a buyer’s market in 2024 as pandemic-driven inflation takes its last gasps,” stated a new report from the national real estate brokerage that offers end-of-year predictions. The report also presages a long-awaited dwindling of mortgage rates, which could prompt more homeowners to put their properties on the market.
Redfin made several big predictions, most of which are homebuyer-friendly. For one, Redfin anticipates year-over-year price declines of 1% in the second and third quarters of 2024, right in the thick of prime homebuying season. If realized, Redfin noted that it would be the first time prices have fallen since 2012, with the exception of a short period at the beginning of this year.
It’s not much, all things considered. After all, 2023 will close with prices up about 3% annually. Typical monthly housing payments for owners are roughly $150 below their all-time peak. But as Redfin stated, “home prices will still be out of reach for many Americans, but any break in the affordability crisis is a welcome development nonetheless.”
Part of the predicted home price dip ties into Redfin’s second prediction: a pickup in listings from the record lows of 2023. The brokerage has already seen some evidence of the supply shortage easing, reporting a recent double-digit annual increase in homeowners who contacted Redfin for help selling their home. While almost every homeowner with a mortgage has an interest rate below current market averages (some vastly so), many are starting to acknowledge the reality that rates aren’t plummeting back to 4% or less anytime soon.
Many of these same homeowners will also look to sell before prices fall further, Redfin prognosticated. It’s already happening in places like South Florida, where prices have jumped in the past few years. Many people in the area are deciding to take advantage of their equity and move toward increased affordability, per Redfin agents.
And about those interest rates? Redfin foresees a steady decrease in the 30-year mortgage rate throughout 2024 after a brief stall near 7% in the first quarter. The Federal Reserve is likely to keep rates steady to kick off the year, with increased motivation by summertime to make two or three cuts before year’s end. But rates will stay above 6%, Redfin predicted, ending next year at 6.6%.
All of that, cumulatively, should be good news for home sales. Redfin forecast 4.3 million sales in 2024, a 5% yearly gain. Sales should gain momentum as the year goes on, a “crucial difference” from 2023, Redfin stated. Existing home sales will post an annualized pace of 4.1 million units in the first three months of the year, up from 3.85 million units in the fourth quarter of 2023. By fourth-quarter 2024, sales should be on a 4.5-million-unit pace.