In the hopes of a return to normalcy, prospective home buyers are eagerly eyeing 2024. Encouraging signs are emerging as mortgage rates, which stubbornly held high throughout 2023, have begun a gradual descent over recent months.

According to Freddie Mac, the average 30-year fixed rate stands at 6.69% for the week ending January 25.

However, despite this slight relief, mortgage rates remain elevated, and home prices continue to soar due to historically low housing inventory, making homeownership a distant dream for many, especially first-time buyers, who are more pessimistic than ever about affording a home.

Looking ahead to 2024, the housing market forecast remains mixed. While some regions may experience a softening in home prices, overall affordability challenges are expected to persist. Economists are cautiously optimistic about the Federal Reserve's stance on interest rates, although affordability may not significantly improve until mortgage rates see a noticeable reduction.

Experts like Mark Fleming anticipate a "flat stretch" in the housing market, suggesting that 2024 won't be the perfect balance following the extremes of previous years.

To facilitate a housing market recovery, experts emphasize the need for increased housing inventory and a gradual decrease in interest rates. Rapid rate reductions could lead to a surge in demand, counteracting any benefits from increased inventory.

Although mortgage rates are currently receding, mortgage originations are expected to rise gradually throughout 2024, alongside a slow but meaningful recovery in single-family mortgage originations, according to forecasts from the Mortgage Bankers Association and Fannie Mae.

Housing inventory remains a significant challenge, particularly in entry-level segments. However, there are positive indicators, such as an uptick in builder sentiment and new single-family building permits.

Existing home sales showed a slight improvement in November, hinting at a potential turnaround in 2024, although inventory remains constrained.

Nevertheless, affordability concerns persist, with home prices continuing to rise and mortgage rates remaining high. First-time buyers are particularly affected, with affordability conditions deteriorating in many markets.

Despite concerns about a potential housing market crash, experts believe that today's homeowners are in a stronger position than those during the 2008 financial crisis. Factors such as demographic trends and wage growth are expected to sustain housing demand in 2024.

Foreclosure activity is expected to increase slightly but is unlikely to reach pre-pandemic levels until mid-to-late 2024, owing to the strength of the economy and expanded financial relief offerings.

 

In conclusion, the decision to buy or sell a home in today's market is highly personal. While some advise waiting for better conditions, others suggest taking advantage of current opportunities to build equity and net worth. Pro tips include moving to lower-priced markets, preparing in advance, and leveraging technology for better listings and sales strategies.