2024 Q4 housing market trends: Rate relief arrives

Leaves aren’t the only things falling this autumn: Mortgage rates are finally heading down, too. And that, combined with a seasonal dip in home prices, is causing some end-of-year excitement among homebuyers and sellers.

The median existing-home price was $416,700 in August, per the National Association of Realtors — a record high for August, but still down from $422,600 a month earlier. And average rates for the benchmark 30-year fixed-rate mortgage loan have dropped from a high this year of 7.39 percent in May to 6.24 percent in late September.

With rates already down more than a full percentage point and more Fed interest-rate cuts on deck, many market-watchers are asking, what do the final three months of 2024 have in store for sellers and buyers? We reached out to a panel of pros for their real estate trends and forecasts.

Q4 2024 housing market trends: What to expect

The last quarter of the year is usually a slowdown period for real estate markets across the country. Typically, home sales tend to decrease in the fourth quarter and stay subdued until spring. During this period, there are usually fewer buyers, the number of homes for sale declines and properties are more likely to see price cuts compared to other times of the year.

“But this fourth quarter could be different for a few reasons,” says Rick Sharga, president and CEO of CJ Patrick Company. “First, the housing supply has increased nationally. Secondly, rates have trended down lately — not necessarily low enough to encourage a flood of new listings, but certainly low enough to entice more prospective buyers to enter the market. These lower rates, combined with slowing home price appreciation and wage growth that’s finally outpacing inflation, improve affordability.”

Molly Boesel, principal economist for CoreLogic, seconds those sentiments. “Many buyers have been waiting on the sidelines to purchase, and many will now purchase quickly,” she says. “Therefore, we most likely won’t see the typical slowdown in the last three months of the year.”

Ralph DiBugnara, president of Home Qualified, says these factors, combined with the presidential election, should ensure sharp movement in favor of buyers between October and December. “It should make the fourth quarter of 2024 probably the busiest of the year,” he predicts.

Q4 mortgage rate projections

As of September 25, the rate for a 30-year fixed mortgage averaged 6.24 percent versus 5.43 percent for a 15-year fixed home loan, per Bankrate’s latest survey of large lenders. And housing experts envision rates dipping even lower over the rest of the year.

“During the next three months, we’re probably going to see average 30-year fixed mortgage rates in the low 6 percent or perhaps the high 5 percent range,” says Ted Rossman, senior industry analyst for Bankrate. “The path forward for mortgage rates will depend on the state of the economy, the job market, what the Fed does and more. Consider that last fall, the average 30-year fixed mortgage rate briefly hit 8 percent for the first time since 2000. Now, we’re moving in the right direction — although today’s rates are still much higher than they were for most of the past 15 years.”

Bugnara anticipates 6.25 percent and 5.625 percent average rates, respectively, for 30-year and 15-year mortgage loans this quarter. But Boesel expects the 30-year mortgage rate to average 6.0 percent this quarter. Sharga mirrors that prediction, with a caveat: “There’s an outside chance it could dip below 6 percent and settle in the high 5 percent range,” he says.

Where home prices are heading

Housing prices have been on the rise for quite some time, and that doesn’t look to change in Q4: Buyers should not expect to see a significant drop in prices before the end of the year.

“Home prices should increase this quarter by 3.9 percent year-over-year,” says Boesel. “Continued homebuyer demand bumping up a still-limited supply will push prices up.”

Bugnara concurs, predicting that we’ll see home prices jump 3 percent to 5 percent over the quarter.

Dennis Shirshikov, an adjunct professor of economics at City University of New York, also foresees prices remaining high — “however, you might see slight cooling in certain overvalued markets,” he says.

Housing inventory predictions for Q4

“We’re unlikely to see a huge wave of homeowners listing their properties for sale until mortgage rates come down significantly — probably below 5.5 percent,” says Sharga. However, he notes that inventory levels are up about 40 percent from last year. “The inventory of new homes for sale is actually back to pre-pandemic levels, so overall there’s more to buy,” he says.

But Shirshikov does not think inventory will grow much more this year, particularly for entry-level homes. “Many homeowners locked into low mortgage rates will continue holding off on selling, restricting supply,” he says.

Boesel anticipates the inventory that does arrive on the market to sell fast. “As new supply enters the market, it should quickly exit as homebuyers waiting on the sidelines act quickly,” she says. For-sale inventory should trend around 15 percent to 20 percent above 2023 levels, she forecasts.

Strategies for homebuyers and sellers

Now that the tea leaves have been read on real estate trends for Q4, how should consumers proceed? If you’re hoping to buy, be sure your finances are in order.

“Don’t buy a home before you’re ready,” says Rossman. “Make sure you have a cushion for transaction costs, repairs and maintenance. It’s better to rent for longer than to buy before you are ready.”

Still, be prepared to pounce if a great opportunity arises. “Competition for properties should remain brisk in quarter number four, so buyers should be ready to act when they find the home they want to purchase,” Boesel says.

“I’d recommend considering less competitive markets where your purchasing power can go further,” says Shirshikov. And if fewer buyers than expected enter the market this season, “you might find some good deals, especially from sellers who are more motivated to close before the end of the year.”

Sellers, meanwhile, should consider the following factors:

• Local market conditions: “Know what’s happening in your local market,” says Sharga. “If homes are selling quickly and prices are rising, it’s probably a good time to list. On the other hand, if you see inventory levels increasing, homes remaining on the market longer and prices weakening, it might make sense to wait until spring to list your home for sale.”
• Competitive pricing: “Even in a seller’s market, buyers are sensitive to high mortgage rates,” Shirshikov says. “Overpricing your property could lead to it sitting longer on the market. Consider offering incentives, such as covering closing costs, to make your listing more attractive, if necessary.”
• Where you will live next: “You can probably get a good price for what you’re listing, but you may have to pay more than you want for what’s next,” says Rossman. “And your mortgage rate could be a lot higher than you are used to, even as rates have begun to come down. Sweet spots are empty-nesters downsizing and people leaving higher-cost markets for lower-cost markets. On the flip side, trading up in a similar market is pricey.”