PARTNERS VOICE | MARKET FORECAST
October 2024

On September 18th, the Fed lit a spark under the Autumn 2024 Housing Market. A much-anticipated, more generous than expected cut of 50bps (or .5% in layman's terms), could help stimulate buyer demand and encourage sellers to jump into the market. Inventory is rising, demand (and therefore competition) is currently low, the economy is recovering, and mortgage rates are gradually dropping. Whether you landed a new job in another state, need to upsize for a growing family, or just spotted your dream home, this fall may be the opportune time to make a move!

Shifting Supply and Demand

For the past ten consecutive months, we've seen increasing inventory on the market. While still not back to pre-pandemic norms, active listings are up 36% from last year across the U.S.. More sellers are competing for limited demand, but with the expected decrease in both interest and mortgage rates, more buyers will start looking and demand will rise, heating up the market.

Mortgage Rates and the Economy

Earlier this year, mortgage rates in the 7% range caused trepidation for both potential buyers and sellers. Now that the median interest rate on a 30-year fixed mortgage is in the 6-6.2% range, that trepidation is beginning to ease. While mortgage rates haven't been below 6% since 2022, they began to drop this August in anticipation of the September Fed rate cut, also triggering a jump in home loan applications. Falling rates will nudge many potential sellers "locked in" to their under 6% mortgage rates to enter the market as well.

The Fed’s Rate Cut

For the first time since March 2020, the Federal Reserve cut interest rates at its September meeting, and not by a conservative .25, but by .5%. While many financial analysts were surprised, Jerome Powell, Chair of the Federal Reserve, called it, "a vote for the Fed's mandated goals: to promote maximum employment and stable prices for the American people." Lowering interest rates on credit cards, auto loans, and other short-term borrowing will provide relief for American households, especially those struggling with unemployment or underemployment per the latest jobs reports.

This significant interest rate cut is the best thing to happen to the housing sector in four years. Mortgage rates have already decreased, and as rates continue to come down, more people will start to move, increasing both supply and demand in the real estate market. In his post-meeting press conference, Powell stated, "I think as we normalize rates you'll see the housing market normalize, and ultimately by getting inflation broadly down and getting those rates normalized and getting the housing cycle normalized, that's the best thing we can do for householders."

While one rate cut won't solve everything, it does spark momentum in the right direction. The Fed is scheduled to meet in November and again in December, with analysts predicting one or two additional .25% rate cuts in 2024. We will, of course, keep you informed in our upcoming newsletters!

Conclusion

After a long period of stagnation, the housing market is finally gaining momentum. With an anticipated series of interest rate cuts into 2025, the National Association of Realtors expects home sales to reach 5.6 million next year. Our best advice is to capitalize on the market's momentum. If you find a home that works for your family and your budget, go for it! It's better to close on the house you love than to lose it, and you can always refinance if there is a significant drop in mortgage rates down the line. As always, please reach out to us directly with any questions - we're here to help!

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