Evolving Trends and What to Expect in The Housing Market Outlook for 2024 and 2025
The housing market, which has struggled to gain momentum this summer, may soon see changes after the Federal Reserve cut the fed funds rate by 50 basis points on September 18. This marks the first cut in over four years, signaling a decline in mortgage rates, now at their lowest since February 2023. With rates behaving more steadily, inventory is starting to loosen, slightly slowing home price growth. However, home prices continue to break records, leaving buyers waiting for further rate drops to improve affordability.
Housing Market Forecast for 2024 and 2025
According to the latest S&P CoreLogic Case-Shiller Home Price Index, U.S. home prices rose by 5.4% annually, although this reflects a slowdown from earlier months. Despite this, prices remain out of reach for many buyers. Lisa Sturtevant, chief economist at Bright MLS, suggests that while home prices may decline later in 2024, they will likely remain high due to historically low supply levels. The market is expected to remain competitive through 2025.
Signs of a Market Recovery
Experts like Keith Gumbinger from HSH.com suggest that for the housing market to fully recover, inventory levels must increase substantially. As mortgage rates continue their descent—currently hovering below 7%—further declines could spark demand, potentially offsetting any inventory gains.
Changes for Buyers and Sellers
The National Association of Realtors (NAR) recently implemented rule changes to create a more transparent home-buying process. These include a shift in how commissions are handled, allowing buyers to negotiate how much they pay their agent. Despite these changes, affordability remains a concern, especially for first-time buyers. Sellers may continue to offer concessions to increase demand for their homes.
Is It Better to Wait?
While mortgage rates may fall further, experts advise buyers not to wait too long, as increased demand could erase any gains in affordability. Competition remains fierce, and prices could continue to rise. Ultimately, waiting until 2025 may not guarantee better market conditions, as affordability challenges persist.
In conclusion, the housing market is showing signs of change, but potential buyers should remain cautious. While mortgage rates are falling, prices remain high, and competition is likely to continue into 2025.
