An expensive market has long been a pressing issue at the forefront of potential home purchases for young homebuyers, and new data from Bright MLS indicates that affordability will be the greatest housing market challenge for the rest of this year.
In an update to its housing forecast for 2024, Bright MLS adjusted predictions for home sales and inventory downward, citing structural factors like mortgage rates and a historically low number of homes for sale, despite short-term improvements in inventory.
“As we head into the second half of 2024, the good news for the housing market is on the supply side,” said Bright MLS Chief Economist Dr. Lisa Sturtevant in a statement. “While there is still a big gap between pandemic-era and current mortgage rates, new listing activity has been increasing. Changes in personal and family circumstances are leading some homeowners to sell despite the persistently highly interest rate environment.”
Bright is now predicting 4.16 million existing-home sales in 2024, down from 4.60 million—the number the MLS projected in November of last year. That would still be a modest improvement from the 4.09 million homes sold in 2023.
As far as available homes, Bright adjusted its expectations from 1.27 million available properties at the end of the year to 1.12 million—again, still higher than last year’s 990,000.
Affordability is a big part of the problem. In 2019, homebuyers needed an income of $67,000 to purchase the median-priced American home, according to Bright. Today, a buyer needs to make $120,000 to afford a median-priced home.
“With prospective homebuyers still facing record-high home prices in some markets and mortgage rates that will remain in the high 6’s for most of the year, affordability is now the biggest challenge in the market. It will force some buyers to delay their homeownership plans into 2025 or even 2026,” Sturtevant said.
Notably, more affordable markets are contributing to home price growth. Certain “pockets” in the Mid-Atlantic, where Bright operates, are relatively affordable, the MLS said, and significant price growth is projected in these areas. At the same time, price growth in higher-cost markets is projected to slow.
“Overall, the median home price in the Mid-Atlantic will rise by 3.3% in 2024, a slower pace of home price appreciation than last year, but closer to the longer-term average,” the report said.
And while inventory nationally is showing slight improvement, that number remains very low—even lower than pre-COVID.
In the Mid-Atlantic, however, Bright’s predictions are slightly less dour. Overall, the supply of homes available for sale is expected to be up by 24.3% compared to the end of 2023, growing slightly faster than the rest of the U.S., where inventory is projected to grow roughly 14% by the end of 2024.
Despite buyers gaining more leverage due to the influx of new listings—and a corresponding gain in leverage for buyers—Bright affirmed that 2024 will remain a seller’s market.
