In the coming year, housing affordability will be influenced by home prices, mortgage rates, and active listings.
As of November 2023, the median sale price for an existing home in the U.S. stood at $387,600, marking the fifth consecutive month of year-over-year price growth. In the Tampa Metropolitan Statistical Area (MSA), the median sale price for a single-family home exceeded the national average, reaching $410,000. In late December 2023, the average 30-year mortgage rate was 6.88%, a decline from the recent 20-year highs observed nationwide. However, it remains higher than the locked-in rates of most homeowners.
Purchase mortgage applications rebounded about 15% from their trough in November, according to The Fannie Mae Economic and Strategic Research (ESR) Group. This is a trend that the ESR Group expects to continue if mortgage rates continue to slide.
2023 has been a slow year for existing home sales, leaving builders to fill the gap. Despite the typical 30-year loan rate dropping to approximately 7%, many buyers and sellers remain cautious, awaiting more favorable market conditions in the future.
“Home price appreciation can only moderate from drastically improved supply. Another 30% rise in home construction can easily be absorbed in the marketplace, especially in light of recent weeks’ plunge in mortgage rates,” said NAR chief economist Lawrence Yun. He predicts home prices will rise around 3% – 4%.
The nation had a 3.5-month supply of housing inventory as of November, which is low enough to be considered a seller’s market, according to NAR. New-home construction will remain a bright spot for the housing market in 2024.
This is where homebuilders have a "significant competitive advantage" over the average home reseller, said the senior VP of research and operations at John Burns Research and Consulting Devyn Bachman. Builders can afford to "buy down" mortgage rates or pay a lump sum upfront to reduce a buyer's monthly payments. New single-family home construction hit an unexpected high in November, boosted by strong demand and lower interest rates, according to a release from the National Association of Home Builders (NAHB) last Tuesday.
Without a significant increase in inventory, the seller’s market seems unlikely to change next year.