Existing-home sales data: What it suggests about 2024 House Predictions
Existing-home sales show what’s happening right now. While they ain’t always predictive, they do point out if 2024 house predictions are way off base or kind of on track. Mortgage rates often determine if folks can afford to buy, so keeping a close eye on changes there is crucial in making 2024 house predictions.
Projecting trends in pending home sales data
Pending home sales—between offer and close—suggest early momentum. So any shifts there signal factors like inventory impacting the 2024 house market. Inflation also messes with affordability in a major way. So retail prices for goods and services could drastically change.
Inflation and Recession Wild Cards
Like storm clouds gathering on the horizon, we’d be remiss not to discuss some potential downside risks. Specifically, the twin threats of higher inflation or economic recession.
Runaway inflation could force the Fed to rapidly hike rates into restrictive territory. This shock treatment would reverberate through the economy, potentially triggering a recession.
History shows that recessions can slam the brakes on the housing market. During 2008’s subprime mortgage crisis, home prices fell almost 30% nationally.
While a 2008-style crash seems unlikely, a recession would certainly cool the jets on the red-hot housing market. Price drops in the 5–10% range can’t be ruled out if the economy backslides in 2024.
The Impact of Inflation on the Housing Market
When forecasting the housing market, it’s critical to understand the broader economic forces at play. The big one we’re eyeing now is inflation.
The last year saw a more than 7% increase in consumer prices, the biggest inflation rate in decades.
Historically, periods of high inflation tend to correlate with rising home prices.
But some experts believe inflation may cool in 2024 as supply chain kinks get worked out. If inflation moderates, the pressure on home prices could ease up.
On the flip side, the Federal Reserve is jacking up interest rates to combat inflation. Higher rates make mortgages pricier, which could price some buyers out of the market.
The Fed’s balancing act will have huge implications for homebuyers in 2024. A slight oversteer into rate hike territory may lead to recession, whereas a soft landing could pave the way for a buoyant housing market.
