There is a division among experts regarding the future trajectory of the housing market as we move into the latter half of the year. Glenn Kelman, the chief executive of Redfin, expressed optimism about the improvement of the housing market in the upcoming months. According to him, the market hit rock bottom in the first quarter of 2024 and is expected to perform better moving forward. Conversely, other experts such as Jeff Ostrowski from Bankrate.com are less certain about the market’s prospects and find it challenging to predict its future.
Orphe Divounguy, a senior economist at Zillow, notes that the mortgage rate lock-in effect, which prevented homeowners with low mortgage rates from listing their homes due to fears of higher interest rates, seems to be wearing off. This has led to an increase in newly listed homes and available inventory compared to the previous year. Despite a rise in supply, the demand for homeownership remains high, especially among buyers who have been postponing their purchase for an extended period.
Doug Duncan, the chief economist at Fannie Mae, acknowledges the rising number of listings but points out that affordability challenges could hinder these listings from converting into actual sales. The affordability factor continues to be a significant consideration for buyers, as mortgage rates have stayed above 7% for an extended period. Although there is a slight decrease in mortgage rates from the previous highs, it has not prompted a surge in buyer competition within the housing market.
Experts project a decrease in the 30-year fixed rate mortgage to 6.5% by the fourth quarter of the year. However, this potential decline might not offer substantial relief to homebuyers due to escalating home prices amidst limited housing inventory. Jessica Lautz, the deputy chief economist at the National Association of Realtors, anticipates the Federal Reserve to maintain interest rates in the upcoming board meeting in June. Nevertheless, there is a possibility of an interest rate cut by the fall, which could influence the housing market dynamics.
While some metropolitan areas like Austin, San Antonio, and Fort Worth, Texas, have witnessed a decline in home prices, the overall national trend has been an increase in median home sale prices. Despite expectations of a slowdown in transactions, prices have remained steady, with a continuous upward trajectory. It is uncertain whether there will be a cooling or decline in prices nationally, as the market shows resilience and a potential for another record high in home prices during the summer.
The housing market’s future remains uncertain, with conflicting viewpoints among experts. While certain factors such as mortgage rates and home prices could influence the market dynamics, the overall trend suggests a mix of optimism and caution. Buyers and sellers alike should stay informed about market trends and be prepared to adapt to changing conditions as we progress into the latter half of the year.