2024 second-quarter housing trends: High hopes for spring

Spring has sprung, a time when thoughts turn to love, or so the poets tell us. But will homebuyers and sellers be feeling the love this season, considering persistent low inventory and continued high mortgage interest rates?

For answers, we reached out to industry pros. Read on for their insights and forecasts on real estate trends over the next three months.

Q2 2024 housing market trends: What to expect

Traditionally, the second quarter is a highly anticipated period for the real estate market, characterized by increased buyer and seller activity. House hunters are motivated to buy and settle into new homes before the start of the next school year, and home sellers take advantage of warmer weather to showcase their properties in the best light.

“It’s a time when home sales are generally highest compared to the other quarters of the year, and inventory levels tend to peak,” says Selma Hepp, chief economist for CoreLogic. “There may be some decline in rates as the spring buying season gets underway.”

Lawrence Yun, chief economist of the National Association of Realtors, is optimistic about the months ahead for the same reasons: “We might finally see a gain in home sales compared to last year’s spring activity,” Yun says. “That’s due to continuing job gains and mortgage rates having slid down to around 7 percent from a cyclical high of 8 percent in October 2023.”

Not everyone sees perfectly sunny skies ahead, though. Greg McBride, CFA, Bankrate’s chief financial analyst, has some reservations about the second quarter market.

“While activity will pick up relative to previous quarters, it may still appear tame relative to this time of year historically — and especially compared to 2021 and 2022,” he says. “Lack of inventory will continue to keep a lid on activity. You can’t buy it if it’s not for sale.”

Q2 mortgage rate projections

As of mid-March, the average mortgage rate for a 30-year fixed loan was a flat 7.0 percent, per Bankrate’s weekly survey of large lenders. Rates have eased up a bit in recent weeks but aren’t falling far or fast enough for eager borrowers yearning to purchase a home or refinance an existing mortgage.

As far as forward-looking housing market trends go, where are rates headed across Q2? There are a lot of factors at play, including inflation and the actions of the Federal Reserve, and expert opinions differ.

“As inflation moderates further and we get closer to the Fed starting to cut interest rates, we’ll see mortgage rates pull back,” McBride says. “Thirty-year fixed rates could fall back below 6.5 percent by mid-year.”

Hepp echoes that prediction: “We expect mortgage rates to continue trending down, albeit with volatility as markets react to the Fed’s actions and in anticipation of future actions — namely rate cuts. We should see mortgage rates move to 6.5 percent over the course of the quarter,” she continues.

Yun foresees the 30-year mortgage rate averaging close to status quo at 6.8 percent. But Dennis Shirshikov, head of content at real estate investment site Awning, actually sees home financing costs climbing higher in the second quarter: “I project a slight increase in rates, with the 30-year fixed rate potentially reaching around 7.85 percent by June,” he says.

Where home prices are heading

We can expect a seasonal jump in home prices in Q2, as is typical this time of year. But, while sales volume may see a slight uptick during this period, the pace of sales could normalize, says Shirshikov, with homes taking a bit longer to sell compared to the frantic pace of recent years.

“CoreLogic’s forecast is for a 3 percent increase in home prices in 2024,” Hepp says. “Some markets could potentially see stronger gains, particularly in areas where home price appreciation lagged during the pandemic.”

Yun also believes home prices across April, May and June will rise slightly from a year ago, “but the increase in home supply is still insufficient to fully satisfy demand, which will cause multiple offers on homes to linger.”

Kenon Chen, executive vice president of strategy and growth at Clear Capital, also subscribes to that theory. “Year-over-year home appreciation continues to grow, but with supply currently remaining below the highs of 2022 and 2023, any increase in demand will continue to bolster home prices throughout quarter two,” he says.

Housing inventory predictions for Q2

The bad news? The current housing supply remains woefully low.

There is good news, though: “It’s encouraging to see a marked supply increase from January 1 of this year to now, although demand based on potential mortgage rate reductions will be important to watch,” Chen says.

McBride notes that “although inventory levels will improve a bit during the peak buying season, demand likely will as well, so don’t expect a sea change from the market we’ve seen recently.”

Hepp also tempers her optimism about improved supply: “While inventories are showing improvement this spring, the imbalance between buyers and sellers remains,” she says. “That will lead to an increase in the share of homes selling over the asking price and a continued seller’s market environment nationally.”

Strategies for homebuyers and sellers

Considering the current real estate trends and market factors, how should home seekers and sellers proceed this quarter? The consensus seems to be, “with slight caution.”

Hopeful buyers should “remain vigilant and flexible,” says Shirshikov. “Getting preapproved for a mortgage loan and having a clear understanding of your budget are crucial. Consider expanding your search to less traditional areas where you can find better value.”

McBride also advises not overstretching your budget. “When affordability is strained, it often leads buyers to reach to the very limit or beyond what they can comfortably afford,” he says. “But leave yourself some breathing room — your income may not always increase or may not increase as fast as you hope, overtime can get cut, unplanned expenses can arise. Leave some buffer so if something like that occurs, it doesn’t lead to a crisis.”

Sellers, on the other hand, may need to exercise patience in finding a qualified buyer — and, if necessary, get a bit creative.

“Be prepared for negotiations, and understand your local market dynamics,” says Shirshikov. “Pricing your home competitively and ensuring it is in prime condition can help attract more buyers.”

In addition, “would-be buyers in need of mortgage financing are receptive to seller-funded temporary rate buydowns,” McBride says. “It is an incentive to offer that doesn’t involve cutting the price of the home.”