Will home prices fall this spring? Here's what some experts think
As spring brings warmer weather and longer days, home buyers and sellers tend to come out of the woodwork. Those who've been thinking about buying all winter long, begin to shop around with lenders, lock in interest rates and hunt for their next dream houses. Meanwhile, sellers look for listing agents and begin to put their homes on the market.
But will spring 2024 be a good time to buy?
Interest rates are currently on the higher end. The Fed has been holding its rate at 5.33%, putting the average mortgage rate at close to 7% — a high not seen in years but a decrease from the near 8% it was in 2023. While Fed rate decreases are expected this year, many don't think they'll come until at least summer.
As for inflation and home prices, both have come down but are still elevated. The inflation rate has been fluctuating between 3% and 4%, while the median price of houses sold is sitting at $417,700 — down from $479,500 at the end 2022, according to the St. Louis Fed.
If you're thinking of entering the housing market this spring but wondering what home prices will do, it helps to know what some experts predict. Below, we'll break down what some are expecting for home prices this spring.
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What will happen to home prices this spring?
Home prices may drop in 2024, but the experts we spoke don't think it's going to happen by spring.
Home prices may stay the same
"In my opinion, we're not going to see significantly lower prices by spring or for 2024 in general, but I also don't think that prices will significantly increase either," says Tate Kelly, a real estate broker at Coldwell Banker Warburg.
Kelly explains that the real estate market is going through a rebalancing phase: "Not many homes were up for grabs at the end of 2023, and sellers, as well as buyers, were hesitant mainly due to the high-interest rates creating a situation of low supply and low demand."
He does, however, think we may see more inventory in 2024 if interest rates drop and sellers get tired of waiting.
"I think buyers and sellers are going to realize that mortgage rates are not going back to the 2019-2022 levels, and after waiting on the sidelines for the past year, they'll jump back into the market once rates get to 6-6.5%," said Kelly, "That theoretically should boost housing prices, but I don't think that will be the case for 2024 simply because buyers don't have the assets to go on a spending frenzy."
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Home prices may increase
On the other hand, some experts are predicting price increases.
"Due to the combination of continued low inventory and improved consumer confidence from the anticipated decrease in rates, we are expecting, and already seeing, continued increase in prices," says Greg Menell, the owner and managing broker of Pendulum Property Group.
"In terms of pricing, this week we had a home come to market for $2.5M that sold for $2.0M 16 months ago. It already has an accepted offer two days later," Menell adds.
Dan Green, the CEO of Homebuyer.com, says spring's housing market is the textbook economic concept of supply and demand.
"On one side, there's loads of buyer demand jumping into the market with mortgage rates down and the economy going strong. On the other hand, you have homeowners who are reluctant to list their homes for sale. There's an imbalance, and it's leading home sale prices higher," Green says.
"Home prices will continue to climb so long as buyers outweigh sellers, and there are millions of home buyers who've been waiting on the sidelines these last three years," he adds.
Local real estate pricing trends can vary
While the predictions vary from home prices holding steady to increasing, none of the experts foresee them dropping by spring. However, keep in mind that trends in local markets can vary from the market at large. Prices may rise significantly in some locations and fall in others, depending on the local economic conditions.
"The pace at which home values rise this spring may slow in certain areas, but it's like taking your foot off the gas in a car. You're still moving forward and going fast," Green says.
