Last Updated on January 29, 2024 by Luke Feldbrugge
Welcome to the Housing Market Trends February 2024 monthly update from Homes for Heroes. This report focuses on the residential real estate housing market. We listen to the experts and boil down what they have to say to assist you, our heroes, with decision making regarding buying a home, selling your home, or refinancing your mortgage.
Housing Market Trends February 2024
The housing market is ever-evolving. Economic factors, government policies, interest rates, and even socio-cultural shifts can play a role in how the market behaves. That said, here are some housing market trends to help keep you informed as you determine what’s best for you.
Interest rates are trending down and experts agree that trend is likely to continue!
Number of homes for sale is still low but with lower interest rates, more existing home owners may enter the market to find a place that better suits their needs.
Home affordability remains challenging, but lower interest rates will help.
Mortgage Interest Rates
Since topping out at 7.79% in October 2023, the weekly average 30-year fixed mortgage interest rate continued to drop through the remainder of 2023. As of January 25th, the weekly average was 6.69%. Some experts believe 30-year fixed mortgage rates may drop below 6% by mid-year 2024.
This is much needed relief and great news for home buyers entering the market. Granted, the interest rates will likely not reach the 2-3 percent all-time lows we experienced during the pandemic, but we are beginning to stabilize and reach a more “normal” interest rate.
Please understand interest rates will always ebb and flow with the market, so you may see the rates creep back up occasionally. But, with today’s current industry and economic scenario, experts are not predicting an exaggerated swing in interest rates going up or down. Instead, it appears the market is continuing to stabilize, and most sources believe that rates will continue to gradually decline over the first half of 2024.
Lower Interest Rates Likely – Means More Inventory
Not only do lower interest rates give buyers more buying power, but lower interest rates also provide would-be home sellers more incentive to sell, and move to a new home that better fits their needs.
The Federal Housing Finance Agency (FHFA) is reporting that 78.7% of current FHFA loans have a mortgage rate less than 5%, based on their time of origination. Homeowners with a current mortgage rate under 5 percent are unlikely to sell their current home unless they must. That means slightly more than 80% of the market is not planning to sell their home any time soon.
However, with rates trending down, and with a chance of getting lower than 6 percent on a 30-year fixed mortgage, the number of homeowners willing to sell may increase, putting more inventory into the market.
That would be great news for home buyers who are running into issues trying to find a home they like, for a price they can afford. And, if you’re a home seller who needs to purchase a new home after selling, this becomes an advantage for you as well.
Top 3 Reasons Buyers Did Not Buy a Home
Below are the main reasons home buyers selected in a Bright MLS survey for pausing their new home purchase. In the survey, multiple reasons could be selected. Does this sound familiar to your scenario?
- 72% – Mortgage rates
- 34% – Home inventory
- 17% – Home Prices or Affordability
The two primary reasons, mortgage rates and home inventory, are improving thus far in 2024. Even when it comes to home prices or affordability; home prices continue to stabilize, interest rates are coming down, and the average household income has gone up, so the affordability issue is also experiencing some relief early in 2024.
Some more good news, Goldman Sachs reported they anticipate the Federal Reserve will likely cut interest rates by 25 basis points in March, May and June 2024; and if this happens, it will bring mortgage interest rates lower during the peak home buying and selling season. Some experts note this Fed rate reduction is likely to occur, but they predict the trend happening later in the year. However, the common consensus is the Fed will be lowering interest rates multiple times in 2024.
New Home Construction Trend
The housing market’s new construction inventory has historically been around 12% of the total home inventory for sale. In November 2023, the builder/construction market of newly built homes available for sale was 31% of total homes for sale according to the National Association of Home Builders.
There’s an opportunity here for buyers. Due to more existing home inventory entering the market because of lower interest rates, some builders may offer a buy down on some of their product and offer a lower rate. If you’re looking to sell your current home and want to downsize, this may be worth looking into in your area.
Home Pricing Trend
When looking at eight of the top industry leader forecasts, the average home price forecast for 2024 is 1.5% increase. That said, each of the eight sources fall within a range of +4.1% to -1.7%. If things follow the average, it will be a good thing for homeowners to experience additional price appreciation on their home. For sellers, your home will likely become a little more valuable in 2024.
Another thing worth noting is the average future home price appreciation rate. Viewing the purchase of a home as an investment, and building equity over time is a common American financial strategy.
According to the Home Price Expectation Survey (HPES), over the next five years, the average homeowner will gain 18% equity in their homes’ value. See the example below for a person who purchases a $400,000 home in January 2024 and the equity gained.
Receive an Average of $3,000 from Homes for Heroes
Receive an Average of $3,000 from Homes for HeroesHomes for Heroes assists firefighters, EMS, law enforcement, active military and veterans, healthcare workers and teachers; with buying, selling and refinancing their home or mortgage. But if you work with our local real estate and mortgage specialists to buy, sell or refinance; they also provide significant savings after you close on a home or mortgage. We refer to these savings as Hero Rewards, and the average amount received after closing on a home is $3,000, or $6,000 if you buy and sell!
Simply sign up to speak with a member of the team. There’s no obligation. After you sign up a member of our team will contact you to ask a few questions and help you determine the appropriate next steps for you.
When you’re ready, we will connect you with our local real estate and/or mortgage specialists in your area to assist you through every step and save you money when it’s all done.
It is how Homes for Heroes and our local specialists thank community heroes, like you, for your dedicated and valuable service.
LIST OF SOURCES:
https://www.keepingcurrentmatters.com/
https://freddiemac.gcs-web.com/node/28181/pdf
https://www.fhfa.gov/DataTools/Downloads/Pages/National-Mortgage-Database-Aggregate-Data.aspx
https://brightmls.com/article/market-survey-winds-of-change-expected-for-2024
https://www.zillow.com/research/2024-housing-predictions-33447/
https://www.realtor.com/research/2024-national-housing-forecast/
https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/2023/mortgage-finance-forecast-nov-2023.pdf?sfvrsn=acef26ff_1
https://www.fanniemae.com/media/49661/display
https://www.freddiemac.com/research/forecast/20231220-us-economy-expanded-in-2023
