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By Jeff Ostrowski<\/div><\/div>\n

Despite predications housing prices would come down, values keep rising in 2024. The reason? The tight inventory. <\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/div>\n

WASHINGTON \u2013 Much to the chagrin of would-be homebuyers, property prices just keep rising. It seems nothing \u2014 not even the highest mortgage rates in nearly 23 years \u2014 can stop the continued climb of home prices.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Prices increased once again in December, according to the National Association of Realtors (NAR), which reports that median existing-home prices were up 4.4% over last year \u2014 the sixth month in a row of year-over-year jumps. In another reflection of ongoing increases, the latest S&P CoreLogic Case-Shiller home price index showed a 4.8% jump in October that represented the ninth month in a row of gains.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

So much for the idea that a \u201chousing recession\u201d would reverse some of the outsized price gains in homes. The U.S. housing market had finally started slowing in late 2022, and home prices seemed poised for a correction. But a strange thing happened on the way to the housing market crash: Home values started rising again.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

NAR data shows that median sale prices of existing homes are near record highs. December 2023\u2019s median of $382,600 is off the all-time-high of $413,800, but not by much, especially for a typically quiet time of year. (Seasonal fluctuations in home prices make June the highest priced month of most years \u2014 the all-time-high was reached in June 2022.) \u201cThe housing recession is essentially over,\u201d says Lawrence Yun, NAR\u2019s chief economist.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Home values held steady even as mortgage rates soared to 8% in October 2023, reaching their highest levels in more than 23 years. (They have since dipped back down, falling below 7% in recent weeks.) The main culprit is a lack of housing supply. Inventories remain frustratingly tight, with NAR\u2019s December data showing only a 3.2-month supply.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

“You\u2019re not going to see house prices decline,” says Rick Arvielo, head of mortgage firm New American Funding. “There\u2019s just not enough inventory.”<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Skylar Olsen, chief economist at Zillow, agrees about the supply-and-demand imbalance. Her latest forecast says home prices will keep rising into 2024 \u2014 welcome news for sellers but not so great for first-time buyers struggling to become homeowners. \u201cWe\u2019re not in that space where things are suddenly going to be more affordable,\u201d Olsen says.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

In fact, the trend is quite the opposite. According to Realtor.com\u2019s December 2023 Housing Market Trends Report, high mortgage rates have increased the monthly cost of financing the typical home (after a 20% down payment) by 6.1% since last year. That equates to $123 more in monthly payments than a buyer last December would have seen.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Mortgage rates fell sharply in late December, a move that boosted affordability. However, lower mortgage rates also are pulling more buyers into the market. \u201cThe potential for a decline in mortgage rates intersects with the prime homebuying time of the year \u2014 if you can find one to buy, that is,\u201d says Greg McBride, Bankrate\u2019s chief financial analyst.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Taking all this into account, housing economists and analysts agree that any market correction is likely to be a modest one. No one expects price drops on the scale of the declines experienced during the Great Recession.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Is a crash coming? No. There are still more buyers than sellers, and that means a meaningful price decline can\u2019t happen: \u201cThere\u2019s just generally not enough supply,\u201d says Mark Fleming, chief economist at title insurer First American Financial Corporation. \u201cThere are more people than housing inventory. It\u2019s Econ 101.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Dave Liniger, the founder of real estate brokerage RE\/MAX, says the sharp rise in mortgage rates has skewed the market. Many would-be buyers have been waiting for rates to drop \u2014 but if mortgage rates do decline, it could send new buyers flooding into the market, pushing up home prices.<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

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\nAuthor: amyc<\/p>\n","protected":false},"excerpt":{"rendered":"