The Short Answer
Summer has traditionally been prime time for homebuying in the US, characterized by competitive prices and an abundance of buyers. However, 2024 brings a twist to this annual trend. Despite a rise in inventory, home prices have reached unprecedented heights, with the average existing home price soaring to $419,300 in May. This has left many potential buyers hesitant, contributing to an extended average market time of 24 days compared to last year’s 18. Yet, this isn’t the full story of 2024’s housing market.
Many prospective buyers are still diving in, driven by varied personal decisions and market dynamics. The question on everyone’s mind is: When is the best time to buy a house in 2024?
Mortgage rates continue to climb, creating a significant barrier for those needing loans. A Fannie Mae survey from June 2024 revealed that 86% of consumers believe it’s not a good time to purchase a home. However, with an 18.5% year-over-year rise in inventory, there’s a glimmer of hope. Amy Lessinger, RE/MAX President, optimistically notes, “If inventory keeps bulking up and mortgage rates don’t change, prices may eventually start to soften.”
Regional disparities further complicate the decision-making process. States like Vermont and New Jersey have seen double-digit percentage increases in home values, while areas such as Washington D.C. have experienced slight declines.
Historically, the summer months in the US are the peak homebuying season, where prices are competitive and buyers are out in full force. This year, home prices remain high, continuing their post-pandemic trend, however the number of homes for sale is slightly higher than the last few years. Deciding the best time to buy a house involves a number of personal decisions, along with specific real estate market factors.
While the current market is causing many home buyers to think twice before buying, others are jumping into the market. Let’s find out why, and look at the factors that determine when the best time to buy a house in 2024 would be.
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US Housing Market Performance In 2024
Existing home prices have hit a record high in 2024, topping $419,300 in May this year. This continued sky-rocketing of prices has resulted in many potential buyers holding off on making any home purchases. In fact, 86% of consumers believe that it’s not a good time to buy a house, according to the Fannie Mae Home Purchase Sentiment Index released in June 2024. Mortgage rates are also still soaring and this is off-putting for many people who would need a loan and simply can’t afford the high interest rates.
Last year, homes were spending an average of 18 days on the market, but in 2024 homes are sitting on the market for 24 days on average, according to data from the NAR. Typically, at this time of year, the housing market would have a high inventory, however recently this dynamic has shifted and inventory isn’t as high as pre-pandemic times. In 2024, we’re looking at a low inventory, but one that has risen 18.5% year-on-year and continues to do so as the year goes, as the NAR reports.
While this may all sound a little doom and gloom for homebuying, the past few years have been tough in the real estate market, and 2024 is looking up. There are more new listings on the market than there were last year, and RE/MAX president, Amy Lessinger says,
“If inventory keeps bulking up and mortgage rates don’t change, prices may eventually start to soften.”
States Where Homes Have Appreciated In Value
Deciding when to purchase a home depends largely on where you wish to purchase. The local real estate market in each area is heavily dependent on that area’s economy and other factors. Some of the states where homes have appreciated in value the most this year are:
1 – Vermont: Home values rose by 12.8% year-over-year in Q1 of 2024, which is the highest house price growth in the US, as inventory hit its lowest point in more than 10 years.
2 – New Jersey: Home prices in New Jersey were 11.6% higher in Q1 of 2024, than they were in 2023 thanks to the influx of buyers moving into this affordable metro.
3 – New York: A 10.9% rise in home prices was experienced in New York year-over-year.
4 – Delaware: Much like New Jersey, the influx of buyers to Delaware led to an increase in home prices of 10.7% between Q1 of 2024 and Q1 of 2023.
5 – Kansas: A 9.9% increase in home prices was seen in Kansas, among the top price increases seen in states across the US.
States Where Homes Have Depreciated In Value
While most home prices are on the rise, there are some home prices that have seen a decline and these are predominantly in Washington D.C, which saw a negative growth. Home prices in Washington D.C declined by 1.5% in Q1 of 2024, in comparison to the same time last year. This is one of the most expensive housing markets in the country, and over 20% of homes in this area are priced well over $1.5million.
Other states that did not experience a high home price growth were Louisiana, Texas and Mississippi, which all experienced price increases under 3.3%. The real estate markets in these areas are cooling, while inventory remains higher, causing price growth to slow down.
US Housing Market Predictions For Q3 + Q4
Mortgage Rates
This year, mortgage rates haven’t shown any signs of slowing down, however the experts think there may still be hope for a decline in mortgage rates later in the year depending on inflation and the Federal Reserve’s decisions.
According to a large survey of lenders done by Bankrate, in June 2024 30-year fixed mortgage rates were 7.03%, while 15-year mortgage rates were 6.38%. Which is up from rates in mid-June, which sat at 5.78%. 30-year fixed mortgage rates were predicted to average at around 6%, but it’s not likely that this will fall below the 6% rate, as many had hoped for in 2024. In fact, some experts believe we may not see that trend until next year.
Ted Rossman, a Bankrate senior credit card analyst expects 30-year fixed mortgage rates to average in the high 6% to low 7% range for the rest of 2024. Molly Boesel, principal economist at CoreLogic echoes this sentiment with a prediction of 6.85% average for mortgage rates. Which means that mortgage rates should remain somewhat stable between now and the end of 2024, albeit not as low as the experts had predicted.
Home Prices
For homebuyers and real estate investors, it’s important to note that home prices aren’t likely to get any lower this year, according to the experts. Based on the fact that the market is still in peak season, where home prices are usually higher, and the lower inventory that continues to exist.
"Prices in this quarter are expected to increase 5.9% from a year ago and 1.5% from the prior quarter, based on CoreLogic data,"
Home prices are forecasted to experience a minimal decrease of about 0.2% over the course of 2024, according to Zillow. This points towards stability in the housing market for the rest of the year.
While home prices may not be as favorable for buyers, this is a good sign of things to come in terms of the market slowing down. It’s likely that more sellers will be listing their homes in the coming year, so it’s important for buyers to note that a crash in the market is not forecasted, and a price growth slowdown is imminent in the next couple of years.
Signs Which Indicate That It's A Good Time To Buy
Lower home prices
When home prices decline, it’s a good time to consider purchasing a home. While this may still be a little way off, it’s a good idea to keep a close eye on the market and take advantage of lower home prices when they arise. These will make purchasing a home more affordable. However, it’s a fine balancing act to find a home when prices are lower, and get into the market before the demand increases drastically.
Lower mortgage rates
When mortgage rates begin to decline, keep your eyes peeled, and once they’ve hit a plateau this is the opportune moment to capitalize and purchase a home. It’s a good idea to shop around for a mortgage with the best rates, and lock these in, once you’ve found the right lender.
Increase in inventory
An increase in the number of houses available on the market, gives buyers a better position to negotiate from. Typically, the larger supply and lower demand in a market, signals a buyer’s market, which gives buyers the bargaining chips to negotiate better deals on homes. If the inventory has risen in the area which you wish to buy, you may want to consider buying, as it might be a better time for you to negotiate a better price on a home.
Signs Which Suggest That It Would Be Better To Wait
Your personal finances aren’t in good shape
Perhaps the most important reason to wait is if your personal finances are not in the best position for purchasing a home. For example, if you are in a lot of debt, you may want to get that under control before making a big purchase like a home, so that you can contribute the largest possible down payment. If your credit score is low, it’s worthwhile rather focusing on improving your credit score, before applying for a mortgage.
Improving your credit score and decreasing your debt will allow you to qualify for more favorable terms on a home loan, when you decide to buy a house. Which means you’ll have lower monthly mortgage payments, as well as the opportunity to put down a larger down payment which can also impact your monthly payments. A lower monthly payment is the best outcome for a home purchase so it’s worth waiting until you’re in a better financial position before taking the plunge.
Housing inventory remains low
While supply remains low, and demand outstrips supply in the housing market, it’s likely that home prices will remain higher as there’s competition amongst buyers. As such, this is not the best time for buyers to consider purchasing a home as they are not likely to have much wiggle room when it comes to price.
Home prices continue to rise
It may not be a good idea to buy a home when prices are on the rise, in this instance it may be better to wait until they’re on the decline. Paying for a home means getting a larger mortgage and having a higher monthly payment on this, which may not be sustainable. The goal with buying a home is to stay in it long enough for the value of the property to appreciate enough to exceed the cost of buying and selling, and essentially come away with your investment appreciating in value and building equity.
As we move into the latter half of 2024, the outlook remains mixed. Experts predict mortgage rates will stabilize but stay high, while home prices may see minimal decreases. Buyers are advised to monitor market trends closely, particularly looking out for increasing inventory and declining mortgage rates as potential indicators of the right time to buy. Balancing personal finances and market conditions will be crucial for making a well-timed purchase in this dynamic landscape.
