Housing market: Why 2024 could be 'another slow year'
US new home sales pulled back by 5.6% in the month of October as mortgage rates remain higher for longer. Redfin Chief Economist Daryl Fairweather shares her predictions for the US housing market in 2024, taking into consideration mortgage rates and the amount of US homebuyers preferring all-cash offers.
"If rates fall below 7%, I think we're going to have a surprisingly strong year," Fairweather tells Yahoo Finance. "That's when I think we're going to see more people out there with bidding wars even."
Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.
This post was written by Luke Carberry Mogan.
Video Transcript
DIANE KING HALL: What are your expectations for how the housing market will look, especially when you think about the first quarter of next year?
DARYL FAIRWEATHER: Well, I'm more optimistic now than I was just a couple of weeks ago when mortgage rates were getting close to 8%.
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The fact that they've come down a little bit makes me more optimistic.
But I think it's gonna be another slow year, at least when we look back historically.
We had so many sales during the pandemic that right now we're still kind of in this hangover.
And rates aren't helping the situation.
There are gonna be more people who are wanting to move because they have a new job or they're getting married or they're having kids.
So people's lives go on.
And that creates demand.
And if we have a strong stock market, people may feel good about spending money.
But those high rates are the biggest drag on the housing market right now.
SEANA SMITH: And Daryl, you mentioned the fact that we need to see some material improvement here, more declines in mortgage rates in order to see that boost in demand.
What level do mortgage rates need to fall to in order to really CB a catalyst here for the housing market.
DARYL FAIRWEATHER: If rates fall below 7%, I think we're gonna have a surprisingly strong year.
That's when I think we're gonna see more people out there with bidding wars even, which is pretty strange because back during the pandemic, rates were 3%.
But rates going up to nearly 8% has reset the threshold, I think, for buyers wanting to get back into the market.
DIANE KING HALL: And are you expecting-- what's your expectations for the all-cash buyer?
That had been previously a big part of the demand picture when it comes to home sales.
What's your expectations for the cash buyer?
Will it still be, say, a third of home sales in 2024?
DARYL FAIRWEATHER: We've seen more cash buyers right now just in terms of the share.