As we approach 2024, it's the perfect time to analyze this year’s real estate market and what we can expect in the coming years. This year, the supply of homes remained at near all-time lows, particularly for entry-level properties. This situation led to a maintained strong demand, leading to increased home prices.
In this blog, we’ll analyze further this year's real estate market trends, identify key insights, and discuss how this will impact the coming year.
2023 Real Estate Market Trends
In June 2023, national home prices, including distressed sales, rose by 1.6% from the previous year. Every month, there was a 0.5% surge in home prices in June 2023 in comparison to May 2023.
Moreover, the high demand levels surpass the ongoing housing shortage as homeowners who are locked in low-interest rates stay put.
However, even with strong demand, the market showed slow activity during a time traditionally considered its peak. Although new construction is ramping up to address the demand for single-family homes, it's unlikely to fully satisfy the existing market requirements.
Here are some factors that affect the housing market:
- Increasing interest rates: Since the start of the year, mortgage rates have been on an upward trend, leading to higher financing costs for homebuyers.
- Growing inflation: The cost of living is increasing due to rising inflation, affecting everyone, homeowners included.
- Limited supply: There’s a low inventory of available homes for sale needed to satisfy prospective buyers.
According to Forbes, in mid-August, the average 30-year mortgage rate in the country went above 7%, hitting a 2023 peak of 7.23%. It then decreased a little, ending the month at 7.18%.
Meanwhile, for the second month in a row, the number of homes sold each month dropped compared to the same time last year. In July, it went down by 2.2%, hitting a half-year low. Every major area in the U.S. sold fewer homes compared to last year, as reported by the National Association of Realtors (NAR).
2023 Real Estate Key Insights
Even with very high mortgage rates and home prices, the market is still highly competitive. This is due to high demand outpacing the limited number of homes available and homeowners with low-interest rates choosing to stay in their homes. These factors contribute to an ongoing affordability challenge, preventing many potential buyers from entering the market.
According to Norada Real Estate Investments, some key findings for 2023 include:
- The average listing price increased by 1.1% compared to the previous year. For the fourth consecutive week, these listing prices have gone up yearly, signaling a significant recovery after seeing drops in June and July.
- In August, the number of new listings, indicating homes being put up for sale, decreased by 5.7% compared to the same month last year. For 59 consecutive weeks, there were fewer new homes listed than the corresponding week of the prior year. Yet, this difference is becoming smaller when compared with the reduced new listings from the later months of 2022. Data from August 2023 highlights a 2.4% improvement from the previous week.
- Active inventory declined, with for-sale homes falling behind year-ago levels by 7.2%.
- Homes remained on the market for an additional 4 days compared to the same period last year. For 57 consecutive weeks, homes have generally taken longer to sell compared to the same week the previous year. However, this difference has been decreasing throughout the year.
How These Trends and Insights Will Impact 2024
Moving forward, Zillow expects a steady increase in average home values. Their prediction suggests a 6.5% growth from July 2023 to July 2024. This outlook highlights the housing market's strength and its ability to maintain growth despite challenging economic conditions.
Moreover, the CoreLogic Home Price Index (HPI) Forecast projects a year-over-year increase of 4.3% in home prices from June 2023 to June 2024, indicating a promising future for the housing market.
In 2023, buyers might have found themselves with a stronger negotiating position, though many areas still faced competition. While the housing market has shown signs of cooling down this year, it's unclear if it will favor buyers or sellers in the future. Some locations are tilting towards buyers, while others continue to favor sellers.
According to Norada Real Estate Investments, here’s what you can expect in the coming years:
- Home prices will continue to rise but at a slower pace
- The supply of homes for sale will increase
- Mortgage rates will rise
- The housing market will remain competitive
In general, the housing market is projected to stay robust over the next five years. Yet, elements like increasing interest rates and an expanding inventory of homes could influence its trajectory.
Preparing for 2024 With VanEd
If you’re a real estate agent, don’t let any of this scare you because, according to online mortgage lender JVM Lending, 2024 will be an epic year for real estate agents.
That’s why, if you’re interested in starting a career as a real estate agent, now is the time to get your real estate license!
However, if you’re already licensed, renew and maintain your real estate license with the required Real Estate Continuing Education program.
Start the new year off strong with VanEd Real Estate Education!
Written and Published by: VanEd
