As we step into 2024, the Houston real estate landscape presents a mix of challenges and opportunities. Last year's fluctuating mortgage rates, coupled with limited property availability and affordability barriers, shaped the buyer's journey. This year, while some challenges persist, the market is poised for gradual improvement, promising a more accessible path for potential homeowners.
Expert opinions on the upcoming residential market trends show a consensus: conditions are improving, albeit modestly. This shift is anticipated to boost property listings, stabilize home value growth, and simplify the buying process.
A closer look at Houston's market reveals a predicted 9.7% decrease in home sales for 2024, accompanied by a 4.5% drop in home prices, as forecasted by Realtor.com. This comes after a challenging 2023, marked by a decline in local home sales for the second consecutive year. Despite this, the start of 2024 shows signs of recovery, thanks to stabilizing prices and an increase in available properties.
In 2023, single-family home sales in Houston totaled 83,854, a 12% drop from the previous year, with all property types experiencing a 13.1% decrease in sales. The median price for single-family homes hovered around $330,000, showing a modest 2.5% year-over-year decrease, while the average price remained steady.
Rising mortgage rates in 2023 were a significant hurdle for homebuyers, but by November, the market saw its first year-over-year sales increase in 19 months. According to HAR Chair Thomas Mouton, the downturn in home sales mirrored national trends, influenced by broader economic factors. Optimism for 2024 hinges on restored consumer confidence, contingent on Federal Reserve actions regarding interest rates and inflation stability.
Industry watchers expect a dip in mortgage rates, though not to pandemic-era lows. Predictions for the 30-year fixed-rate mortgage range around 6.5% to 6.8% for most of 2024. The Federal Reserve's success in controlling inflation may lead to rate cuts by mid-year.
Danielle Hale from Realtor.com notes the recent decrease in mortgage rates as a sign of the times. The upcoming year might bring us back to pre-pandemic mortgage environments, albeit at higher rates.
Inventory improvements are on the horizon, with existing-home sales expected to fall by 18% from last year. The mortgage lock-in effect, where homeowners hold onto properties due to higher current mortgage rates, might ease, leading to a modest increase in available homes.
Economists like Daryl Fairweather of Redfin and Orphe Divounguy of Zillow anticipate more homeowners entering the market in 2024, influenced by life events and a stabilizing economic outlook. Predictions also suggest a boost in home sales, especially in existing and new construction markets.
On the construction front, single-family housing starts are showing resilience, with 2023 poised to be one of the strongest years since 2008. The National Association of Home Builders forecasts 950,000 single-family housing starts in 2024, a hopeful sign amidst the ongoing housing shortage.
Affordability remains a concern. Even with potential rate moderation and increased inventory, significant affordability improvements are not expected. However, Realtor.com forecasts a 1.7% decline in home prices for 2024, a slight relief for buyers.
Finally, migration trends continue to influence the housing market. Cities like Los Angeles and the San Francisco Bay Area might see a rebound in sales, with affordable Midwestern and Northeastern markets, such as Toledo and Rochester, expected to perform well. Sun Belt cities like Nashville and Austin are likely to attract continued migration, buoyed by a diverse range of affordable housing options.
In conclusion, while 2024 presents its own set of challenges, the Houston housing market is gradually aligning towards a more buyer-friendly environment, marked by moderated prices, increased inventory, and hopeful shifts in mortgage rates.
I hope you have found this blog post super helpful. If there is anything else we can do for you, including helping you sell (or buy) a home, I would be honored to assist. I hope you have a great day/evening. Cheers, E + J.
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