Real estate experts predict what to anticipate from the housing market in the second half of 2024.

• Although experts predict an increase in the number of homes available, they believe that the increase in supply is insufficient to address affordability problems for buyers.
• High prices are not likely to be offset by a decrease in interest rates.
• Jeff Ostrowski, a housing analyst at Bankrate.com, stated that the market is quite unusual and it's challenging to make accurate predictions.

There is uncertainty among experts regarding the direction of the housing market in the second half of the year.

"According to Glenn Kelman, CEO of Redfin, the housing market is predicted to improve in the next six months, based on his statement on May 22 during a CNBC interview."

In the first quarter of 2024, we reached rock bottom in the housing market, but I anticipate a slight improvement, according to Kelman.

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Other experts are less sure about the market's prospects for improvement.

Jeff Ostrowski, a housing analyst at Bankrate.com, stated that the market is quite unusual and it's challenging to make accurate predictions.

Real estate experts predict that several factors could influence the real estate market in the second half of 2024, including the opinions of Ostrowski and Kelman.

More homes are coming on the market

According to Zillow senior economist Orphe Divounguy, the mortgage rate lock-in effect appears to be diminishing.

Homeowners with extremely low mortgage rates were hesitant to sell their homes last year due to the mortgage rate lock-in effect, also known as the golden handcuff effect, which prevented them from financing a new home at a higher interest rate.

According to Realtor.com's weekly housing trends report, newly listed homes increased by 2.1% from the previous year during the week ending June 1. Meanwhile, the available inventory of homes for sale grew by 35.5% compared to the same period last year.

During his CNBC interview, Kelman highlighted the persistence of high demand for homeownership, particularly among those who have delayed purchasing a home for an extended period.

Despite the increase in listings, the surge in supply is not sufficient to entice buyers, as per Doug Duncan, senior vice president and chief economist at Fannie Mae.

"Duncan stated in a recent release that listings have been increasing, indicating that more current homeowners are unable to delay moving. However, the company believes that affordability issues will slow down the conversion of new listings into actual sales."

'Some movement' on interest rates

According to Freddie Mac data via the Federal Reserve, the 30-year fixed rate mortgage dropped 6.99% on June 6 after increasing 7.22% on May 20.

Divounguy stated that although mortgage rates have decreased slightly from their May peaks, this has not resulted in a significant increase in competition among buyers in the housing market.

Rates stayed above 7% for long, making affordability a top priority for buyers.

While the Federal Reserve is predicted to keep interest rates unchanged at the June 12 board meeting, the National Association of Realtors anticipates a possible interest rate reduction by the end of the year, as stated by Jessica Lautz, the NAR's deputy chief economist.

"At least what our hope is is that by late September we will start seeing movement on the Fed funds rate," she said.

Lautz pointed out that although mortgage rates are predicted to decrease to 6.5% in the fourth quarter, homebuyers may not experience significant relief due to the increase in home prices and the limited availability of housing inventory.

She stated that it's likely that they'll continue to pay the same mortgage amount because they're buying a house with a lower interest rate but a higher price tag.

'It's hard to foresee prices really cooling'

Despite broader expectations, housing prices haven't softened even though the number of transactions in the market has slowed down, as explained by Ostrowski.

According to Redfin, the median home sale price in the U.S. rose by 4.4% to $392,200 from the previous year.

""It seems likely we'll see another record high for home prices this summer, as it's difficult to predict prices cooling or declining nationally," said Ostrowski."

In some U.S. metropolitan areas, home-sale prices have decreased. Specifically, Redfin data shows that prices declined 2.9% in Austin, 1.2% in San Antonio and Fort Worth, Texas, and 0.9% in Portland, Oregon.

Despite recent price declines, buyers may not experience significant affordability relief due to the significant price increases during the Covid-19 pandemic, which saw some areas experience a 45% increase in prices, according to Lautz.

In 2024, 90% of metro markets experienced home price increases, according to NAR data. Despite some local markets experiencing softer price points, the "overwhelming majority of markets are witnessing home price growth," stated Lautz.