2023 was the worst year to buy a house since the 1990s. But there’s hope for 2024

The previous year posed significant challenges for both homebuyers and realtors, as a combination of factors made the housing market exceptionally challenging. With mortgage rates approaching 8%, home sellers tended to reduce their prices, but a severe housing shortage exacerbated the situation, causing prices to persistently rise due to high demand and limited supply.

There is a concerning trend of home prices consistently increasing over six consecutive months. The latest report from the group revealed that the median home price in 2023 reached a record high of $389,800. Concurrently, the number of homes sold plummeted to its lowest level since 1995. The jump in interest rates that we saw last year really was a shock to the system.

The impact of elevated mortgage rates goes beyond simply doubling the cost of purchasing a home compared to a few years ago. These higher rates have also influenced the availability of homes in the market. Individuals who currently own a home with a low 2% or 3% mortgage rate are less inclined to list their properties for sale. The hesitation stems from the prospect of acquiring another home and being subjected to a significantly higher mortgage rates.

Wait, there’s hope for home buyers in 2024

But while all that sounds pretty dismal for anyone wanting to buy a home, realtors sense that things are about to improve for buyers.

Mortgage rates are meaningfully lower compared to just two months ago, and more inventory is expected to appear on the market in upcoming months.

Rates for 30-year fixed-rate mortgages continued to fall over the past week to 6.6% according to the mortgage industry giant Freddie Mac’s weekly rate tracker.

And that is making us realtors feel better about the months ahead.

We’re at a very interesting moment in the real estate market. The group does a monthly confidence survey of it’s members. We’re actually seeing the optimism grow.

It’s important to remember that people who just bought houses last month locked in their mortgage rates two or three months ago when rates were much higher. But we are hearing from realtors that they’re already seeing more interest from homebuyers.