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Real Estate Market Update   Written By: Ivan Marquez Executive Assistant

July 2024 Monthly Market Report 

This month’s report delves into key factors shaping the real estate landscape, including home sale forecasts, home price trends, inventory levels, mortgage rate projections, the impact of the 2024 presidential election, and the National Association of REALTORS® (NAR) settlement.

Home Sale Forecast

The current real estate market is navigating through a period of cautious optimism tempered by challenges in affordability and financing costs. Projections for home sales indicate a slight decline influenced by elevated mortgage rates, which have deterred some potential buyers from entering the market. Despite this, experts anticipate a gradual stabilization as economic conditions improve and mortgage rates potentially moderate in the latter part of the year. 

Historically, post-election periods often see renewed consumer confidence, suggesting a potential rebound in home sales once uncertainties around the 2024 presidential election settle. This cyclical pattern underscores the resilience of the housing market, which tends to recover quickly from election-related dips.

Home Price Trends

Home prices have exhibited robust growth, albeit with variations across different periods. While there was a brief dip in January, subsequent months have shown consistent appreciation, driven primarily by a persistent shortage of homes relative to demand. This imbalance continues to exert upward pressure on prices, with forecasts predicting a moderate annual appreciation of 3% to 5%.

Factors contributing to this trend include limited housing inventory, increased construction costs, and ongoing buyer demand fueled by demographic shifts and lifestyle changes. Looking ahead, market stability hinges on factors such as mortgage rate fluctuations and economic policies that could influence housing affordability and price dynamics.

Inventory Level

Inventory levels have seen incremental improvements compared to the previous year but remain significantly below pre-pandemic levels. Despite an increase in new construction projects aimed at addressing housing shortages, overall supply remains constrained, particularly in desirable urban areas. 

This shortage continues to drive competitive bidding and higher home prices, limiting options for prospective buyers. The gradual recovery in inventory, coupled with potential policy interventions and market adjustments, will likely play a crucial role in moderating price escalations and improving affordability over the coming months.

Mortgage Rate Projections

Mortgage rates have reached their highest levels in two decades, posing challenges to home affordability and overall market activity. The current rate environment has prompted cautious behavior among buyers, impacting their purchasing power and decision-making timelines. However, there are expectations for a potential easing of rates to around 6.5% by the end of the year, which could stimulate renewed interest in home buying and refinancing. 

The Federal Reserve's monetary policies and economic indicators such as inflation and employment data will continue to influence mortgage rate movements, shaping market conditions and buyer sentiment in the near term.

Impact of the 2024 Presidential Election

Presidential election years historically introduce uncertainty into the real estate market, with home sales typically experiencing a temporary slowdown during election cycles. This hesitancy among buyers is often driven by concerns over potential policy changes and economic shifts that may impact their financial outlook and investment decisions. 

However, past trends indicate that the market tends to stabilize quickly post-election, increased by renewed consumer confidence and clearer economic direction. As the 2024 election unfolds, real estate stakeholders will closely monitor developments and adapt strategies to navigate potential market activity and sentiment fluctuations.

NAR Settlement Impact

The recent settlement between the National Association of Realtors (NAR) and the Department of Justice (DOJ) aims to bring greater transparency and competition to the real estate industry. Key provisions include reforms to commission structures and disclosure practices, intended to enhance fairness and consumer trust in real estate transactions. While the long-term impact of these changes is still evolving, industry experts anticipate improvements in market efficiency and client satisfaction. Realtors and brokerage firms are adjusting to these regulatory shifts, which are expected to reshape industry practices and standards in the years ahead.

Bottom Line

The real estate market in 2024 is expected to experience moderate price appreciation and an increase in inventory, driven largely by new construction. However, high mortgage rates and regulatory changes will influence buyer behavior, emphasizing the need for adaptability in navigating these shifts. The continued imbalance between supply and demand will keep upward pressure on home prices, making it essential for both buyers and sellers to stay informed and flexible.

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