As we continue into the 2nd half of 2024, prospective home buyers are keenly observing the evolving housing market trends to determine if affordable home prices are on the horizon. The spring home-buying season, anticipated to be promising, ended up being a thorny challenge for many, with elevated mortgage rates and high home prices stalling sales. However, a silver lining emerged as more resale inventory entered the market, putting some downward pressure on the pace of home price growth. Additionally, the median price for a new home has dipped below that of resale homes, with builders offering incentives to attract buyers. For those living in Metro Detroit or considering moving to Metro Detroit, these trends provide a glimmer of hope. Yet, experts agree that the market will only gain renewed momentum when mortgage rates drop sufficiently to alleviate affordability issues and encourage homeowners locked in at low rates to consider moving.
Housing Market Forecast for 2024
Despite the challenges posed by high mortgage rates, prohibitive home prices, and sluggish sales, experts maintain a cautiously optimistic outlook for the housing market in 2024.
Hopeful buyers, however, may need to temper their expectations for an imminent shift, as several persistent factors continue to impede progress. Notably, inflation remains stubbornly high, delaying the Federal Reserve's ability to lower the federal funds rate. This key interest rate, which influences overnight lending between banks, indirectly affects mortgage rates. With the federal funds rate at its peak in over two decades, the ripple effect has made home affordability a significant concern for potential buyers.
In the midst of these challenges, U.S. home prices have defied expectations by continuing their upward trajectory. The S&P CoreLogic Case-Shiller Home Price Index reported a 6.3% year-over-year increase in April, a slight deceleration from the 6.5% gain observed in March, yet still a record high.
While many industry analysts believe that a reduction in the Fed's rate could provide the much-needed boost to the housing market, the timing and certainty of such a cut in 2024 remain speculative.