Story by Erik J. Martin for Bankrate
We may be in the thick of winter, but many homebuyers and sellers are starting to have warm thoughts about the housing market. That’s because, looking ahead, market indicators suggest we’ll see increased activity thanks to lower mortgage rates. Yet home prices remain high and inventory levels are tight in many markets.
How will the first quarter of 2024 shake out when it comes to rates, prices, sales activity and more? We asked top real estate experts to identify upcoming trends and offer their predictions.
What to expect in Q1 2024
The first quarter of the year is often a slower one for real estate due to colder weather and the inclination among buyers and sellers to wait things out until closer to spring.
“We typically see housing inventory remaining low until February and then ramping up from March onward,” says Lawrence Yun, chief economist for the National Association of Realtors. “Homebuying and open house visits also ramp up starting in March.”
Rick Sharga, founder and CEO of CJ Patrick Company, agrees. “Quarter number one is usually something of a reset for the housing market,” he says. “Prices and sales volume decline toward the end of the previous year, and January is often the weakest month in terms of pricing, inventory and sales activity. But things start to pick up in February and March. I expect the first quarter of 2024 to feel like a continuation of 2023, with relatively weak home sales and modest price increases. Still, mortgage rates have recently dropped at the quickest pace in decades, and will probably continue to decline through the first quarter — bringing more prospective buyers back into the market.”
Shri Ganeshram, founder and CEO of real estate investment site Awning, also anticipates an atypical uptick in buyer activity this quarter, which “could lead to a more dynamic market than usual for this period.”
But those lower-rate-motivated buyers will likely continue to face a dearth of supply. One major reason is that the vast majority of mortgage holders have an interest rate that’s 6 percent or lower, says Kenon Chen, executive vice president of strategy and growth for Clear Capital. That creates a lock-in effect that encourages them to stay put rather than sell and purchase another property. “We may see more homeowners tap into their available equity this quarter to make improvements in place rather than move,” says Chen.
