It’s undeniable that this past year has been challenging for homebuyers. If you’ve begun the home search process but decided to put it on hold due to the market’s difficulties, you’re not alone. According to a study by Bright MLS, some of the main reasons buyers paused their search in late 2023 and early 2024 were:
- Inability to find homes within their budget
- Unsuccessful offers or trouble competing
- Difficulty finding the right home
If any of these reasons resonate with you, here’s what you need to know: the housing market is transitioning in the second half of 2024. Here are four reasons why this might be the perfect time for you to resume your search.
1. The Supply of Homes for Sale Is Increasing
A major shift in the market this year is the rising months’ supply of homes for sale. Data from the National Association of Realtors (NAR) shows that inventory has steadily grown throughout 2024 (see graph below):
This graph illustrates the months’ supply of existing homes, those previously occupied by another homeowner. The upward trend this year is evident.
This increase improves your chances of finding a home that meets your needs and preferences. If your primary reason for halting your search was the difficulty in finding the right home, this is a significant relief.
2. Increased New Home Construction
If you’re not finding an existing home you like, there’s another significant opportunity in the rise of new home construction. Builders have focused on increasing the supply of newly built homes this year, particularly smaller, more affordable options to meet current market demands.
This effort helps address the nationwide housing undersupply and alleviates some of the affordability challenges buyers face today.
Data from the Census and NAR shows that one in three homes on the market is newly built (see graph below):
This means that if you didn’t consider newly built homes in your previous search, you may have overlooked a third of the available options. Additionally, some builders are offering incentives, such as buying down mortgage rates, to help buyers find homes within their budgets.
Therefore, it’s worth discussing with your agent what builders are offering in your area. Your agent’s knowledge of builder reputations, contracts, and other details will be invaluable in helping you evaluate your options.
3. Reduced Buyer Competition
With mortgage rates still hovering around 7%, buyer demand isn’t as intense as it once was. Coupled with increased housing supply, this gives you a better chance of avoiding intense bidding wars. Danielle Hale, Chief Economist at Realtor.com, notes the favorable conditions for the latter half of 2024, stating:
“Home shoppers who persist could see better conditions in the second half of the year, which tends to be somewhat less competitive seasonally, and might be even more so since inventory is likely to reach five-year highs.”
This presents a unique opportunity for you to find a home with less stress and potentially at a better price.
4. Home Prices Are Stabilizing
Regarding prices, home prices are beginning to moderate, which is a welcome change after the rapid appreciation of recent years (see graph below):
This moderation is primarily due to supply and demand dynamics. With supply increasing and demand easing, prices aren’t rising as quickly. However, this doesn’t mean prices are falling; they are still increasing but at a more normal rate. The graph shows this trend with bars indicating rising prices, just not as dramatically as before.
The average forecast for home price appreciation in 2024 predicts positive growth of around 3% to 5%, which aligns more closely with historical norms. This moderation means you’re less likely to encounter the steep price increases seen in recent years.
The Opportunity Ahead
If you’re ready and able to buy, the second half of 2024 may be easier to navigate. While challenges remain, some of the biggest hurdles are improving over time.
On the other hand, you could choose to wait. However, doing so carries a risk. As more buyers recognize the market shift, competition will increase. Similarly, if mortgage rates decrease as forecasts suggest, more buyers will flood back into the market. Acting now allows you to take advantage of current market conditions and stay ahead of future competition.
Bottom Line
If you’ve put your dream of homeownership on hold, the second half of 2024 might be the perfect time to revisit it. Let’s connect to discuss the opportunities available in today’s market.
