Active Inventory

The year began with lower active listing inventory than the previous year, far below the 10-year average and at its lowest level since 2004. The scarcity of inventory persists and is expected to reach its lowest point during the summer. As mortgage rates improve in early summer, we anticipate more buyers entering the market and more homeowners being encouraged to list their homes. We expect to see an increase in homes coming onto the market starting in late spring.

Demand

Buyer demand has decreased by 4% from the previous year, primarily due to low inventory and high mortgage interest rates. However, we anticipate a substantial increase in buyer demand during the late spring market. As rates float under 7% for duration, the housing market will heat up, largely due to improved affordability. This environment will lead to multiple offers and bidding wars. Buyers should be prepared to stretch their budgets in order to secure a home.

Home Values

Housing values saw a year-over-year increase of 4.8%, primarily during the early first quarter. Home values are expected to rise between 4% and 6% over the course of the year.

Closed Sales

Closed sales have decreased by 12% from the first quarter of 2023. However, the number of successful, closed sales is expected to rise in the spring and summer of 2024.

Luxury Market

Luxury sales have remained flat year-over-year in the first quarter of 2024. The summer market is expected to be the strongest period for luxury sales, which will then become a bit more sluggish from September through the end of the year.

Interest Rates

Mortgage rates fluctuated around 7% for the first quarter of 2024, eventually stabilizing in the high 6% range towards the latter half of the quarter. Over the next few months, rates are expected to oscillate between 6.5% and 7% until the economy noticeably cools in late summer. Following this, mortgage rates are anticipated to decline to between 6% and 6.5% as the economy cools and inflation eases. By the end of the year, expect rates to fall below 6.5%, approaching 6.0%.

Housing Cycle

The housing market experienced delays throughout the first quarter. The housing cycle is expected to see inventory peaking in mid-summer, with buyer demand remaining active through the end of summer before declining in the autumn market.

THE BOTTOM LINE

The housing market continues to be influenced by the direction of mortgage interest rates and home affordability. As rates decrease, affordability will improve, eventually stimulating more demand. Mortgage rates are expected to gradually decline as the economy slows this year and inflation continues to decrease.