Housing market activity has picked up across the country. However, in December, the South was the only region in the United States that saw significant year-over-year growth in inventory at 7.7%.

The higher number of unsold inventory could be attributed to the ongoing growth in newly listed homes, according to Realtor.com. The organization also credits the downward trend in mortgage rates to have a positive impact on home-selling sentiment, leading to more new listings on the market.

For the first time since Fannie Mae began conducting monthly National Housing surveys in 2010, more homeowners, on average, said they believed mortgage rates would go down rather than up over the next 12 months. The percentage of consumers who said it’s a good time to buy a home increased to 17% in December, up from an all-time survey low of 14% in November. A “significant shift” in consumer expectations could free many homeowners from the mortgage “lock-in effect” and boost the supply of for-sale listings in 2024.

“…a more positive mortgage rate outlook may incent some to list their homes for sale, helping increase the supply of existing homes in the new year,” said Fannie Mae Deputy Chief Economist Mark Palim in a statement Monday. “This significant shift in consumer expectations comes on the heels of the recent bond market rally and an already-significant downtick in 30-year mortgage rates, from their high of nearly 8% in early November to 6.62% as of this past week.”

The average 30-year fixed mortgage rate will hover near 6.3% in 2024, according to NAR Chief Economist Lawrence Yun. He also predicts that the Federal Reserve will implement four rate cuts, aiming to alleviate inflationary pressures arising from a decline in economic activity.

Inflation has been slowing across all major sectors, bringing relief to consumers and businesses nationwide. Consumer prices increased by 3.1% year over year in November, driven by reduced prices in durable goods such as used cars, furniture and electronics over the past year.

With increased inventory and slightly reduced mortgage rates providing buyers with more flexibility, NAR predicts a surge in existing home sales. Approximately 4.71 million existing homes are expected to be sold in 2024, marking a 13.5% rise from the projected 4.1 million units sold this year, according to Yun’s forecast. Rent prices are also expected to slump in fiscal 2024, which should further weigh down the consumer price index.

While annual median home prices are expected to remain the same this fiscal year, rapid wage growth should help improve affordability this year.