Published by REALTOR.com | December 21, 2023
Has the housing market finally turned a corner to end the year looking merry and bright?
A new report from the National Association of Realtors® has found that after five straight months of declines, sales of existing homes ticked up by 0.8% in November compared with the previous month, to a seasonally adjusted annual rate of 3.82 million.
This data, released on Wednesday, offers a glimmer of hope that, although home sales throughout 2023 are slated to be at their lowest levels since the housing crisis of 2011, America’s real estate market may have at long last hit bottom—and could be poised to begin a slow but steady recovery next year.
The real estate market’s recovery will depend heavily on mortgage rates—which reached a multi-decade high in October with rates for a 30-year fixed loan averaging 7.49%, according to Freddie Mac.
Since then, rates have dropped to 6.67% for the week ending Dec. 21, providing some relief to homebuyers who are grappling with affordability and luring more home shoppers from the sidelines.
In fact, this November NAR report “still reflects the buyer bidding process in most of October when mortgage rates were at a two-decade high,” NAR Chief Economist Lawrence Yun noted in a press release. “A marked turn can be expected as mortgage rates have plunged in recent weeks.”
Realtor.com® economic research analyst Hannah Jones also thinks the NAR report portends good things for housing in 2024.
“The data hints at the impact that falling mortgage rates will have on buyer activity,” Jones explains. “Though seller activity remains stifled, the existing-home sales data suggest that buyers are ready to respond to more affordable housing conditions. While buyer activity is likely to remain relatively low, any improvement in housing affordability is likely to bring more buyers into the market.”
As a result, “though housing affordability is likely to persist as a key challenge to prospective buyers next year, we expect that the market will see small wins with lower mortgage rates and softening home prices,” Jones adds.
Yet wannabe buyers who’ve put a house on their wish list for 2024 should know that they might still face formidable challenges.
