Mortgage rates will remain higher for longer, falling to 6.4% by year-end

NORTH BETHESDA, Md., June 27, 2024 /PRNewswire/ -- Affordability will be the biggest challenge for the housing market for the remainder of 2024, and will keep overall home sales more muted than had been expected, according to the Bright MLS Housing Market Forecast Update released today. Although mortgage rate lock-ins will continue to keep some would-be sellers on the sidelines, life events have led others to sell, leading to a rise in housing inventory in most regions across the country.

"As we head into the second half of 2024, the good news for the housing market is on the supply side. While there is still a big gap between pandemic-era and current mortgage rates, new listing activity has been increasing. Changes in personal and family circumstances are leading some homeowners to sell despite the persistently highly interest rate environment,"  Lisa Sturtevant, Bright MLS Chief Economist, said. "With prospective homebuyers still facing record high home prices in some markets and mortgage rates that will remain in the high 6's for most of the year, affordability is now the biggest challenge in the market.  It will force some buyers to delay their homeownership plans into 2025 or even 2026."

Revised 2024 U.S. Housing Forecast

pp = percentage points

Affordability weakens buyer demand

Prospective homebuyers are still facing mortgage rates that will remain in the high 6's for most of the year. Affordability is now the biggest challenge in the market and will keep some prospective buyers sidelined this year. In 2019, a homebuyer needed an income of about $67,000 to purchase the median-priced home in the U.S. Five years later, in 2024, as both home prices and mortgage rates have increased substantially, a homebuyer now needs an income of more than $120,000 to afford the median-priced home.

Inventory is improving, but still low

Even with inventory growing nearly 14% by year-end, it is still low by historical standards. The housing market will end the year with 20% fewer homes for sale than 2019, which means that while buyers will have more leverage, it is still technically a seller's market.

Home price growth is a mixed-bag

Prices have risen strongly in the first half of 2024, but home price growth is expected to slow in the second half of the year. More supply and cooler demand will lead to less upward pressure on home prices. Although there are no signs of a major home price correction in the U.S., median prices will fall year-over-year in some markets where demand is weakening and inventory has increased significantly.

Revised 2024 Mid-Atlantic Housing Market Forecast

The Mid-Atlantic housing market is something of a microcosm of the larger U.S. housing market, and 2024 forecasts for the region generally track in line with the U.S. outlook.

More affordable markets drive home price growth
There are some pockets of the Mid-Atlantic region where homes are relatively affordable and local economic conditions remain strong. In some of these more affordable markets, home prices will continue to rise briskly in 2024, while price growth in some higher-cost markets will slow. Overall, the median home price in the Mid-Atlantic will rise by 3.3% in 2024, a slower pace of home price appreciation than last year, but closer to the longer-term average.

Greater inventory gains in the Mid-Atlantic
At the end of 2024, the supply of homes available for sale is expected to be up by 24.3% ,compared to the end of 2023. Inventory is growing slightly faster than the U.S. overall with more new listings and a slightly slower pace of home sales activity. Despite the increase, inventory is still more than 30% lower than it was at the end of 2019.

To view Bright's full 2024 housing forecast update, please visit: brightmls.com/research

Methodology: Bright's forecast is based on analysis of historic data from the National Association of Realtors and Freddie Mac, as well as weekly listing data from Altos Research, and takes into account economic and demographic factors that will drive housing demand and supply in 2024. 

About Bright MLS

Bright MLS was founded in 2016 as a collaboration between 43 visionary associations and two of the nation's most prominent MLSs to transform what an MLS is and what it does, so real estate pros and the people they serve can thrive today and into our data-driven future through an open, clear and competitive housing market for all. Bright is proud to be the source of truth for comprehensive real estate data in the Mid-Atlantic, with market intelligence currently covering six states (Delaware, Maryland, New Jersey, Pennsylvania, Virginia, West Virginia) and the District of Columbia. Bright MLS's innovative tool library—both created and curated—provides services and award-winning support to well over 100K real estate professionals, enabling their delivery on the promise of home to over half a million home buyers and sellers monthly. Learn more at BrightMLS.com.

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SOURCE Bright MLS