Last November, we published a housing market report from Chris Kincaid, Senior Director of Sales at Pahlisch Homes. In that post, Chris recapped what happened in the market in 2023 and shared his predictions for 2024.

Today, Chris is back with a 2024 mid-year housing market report. Below, he’ll recap the last few quarters, reviewing his previous predictions and sharing what did and did not surprise him about how the market has played out so far this year. Then, Chris will provide his outlook on the second half of 2024 and how trends in the market might impact builders and homebuyers.

Q4 2023 & Q1 2024 Housing Market Recap

Looking back on the final quarter of 2023 and the first quarter of this year, one thing that’s surprised me is how obedient the market was to the crystal ball I keep on my desk. All joking aside, the market has been behaving as it should in a normal spring market. Which is very refreshing after the turmoil of the last few years post-COVID.

Generally, in the four three regions where Pahlisch Homes operates (Central Oregon, Northwest Oregon, and Southwest and Southeast Washington), the market hasn’t been too hot or too cold. None of our communities are overperforming or underperforming and are right on track with what we’d expect for this season during a more-or-less average year.

People Are Still Buying Homes Despite High Rates

Every year, our sales follow a bell curve that’s reflected throughout the general real estate market. The bell curve starts in January and builds to a peak in April, which levels off in May and slows down in summer. Then, you get a little bit of a fall comeback before sales tail off in winter. This year, we see purchases following that typical bell curve. So, despite some of the economic headwinds we have right now, people are still buying homes. Here’s one reason why this might be the case.

While affordability concerns generally mean fewer buyers in the marketplace right now, that is being balanced out by low resale inventory due to what’s known as a “lock-in effect”. This is when people who bought homes two to three years ago when mortgage rates were much lower are reluctant to move or sell their homes because they don’t want to lose that awesome rate.

This lack of pre-owned homes often means a new construction home is the most attractive option. Here at Pahlisch, we have communities under development and new homes available for sale, so people are coming to us because of the great lifestyle a new home neighborhood can provide.

No Rate Cuts Thanks to Stubborn Inflation

One thing that’s unexpected and has caught every economist by surprise is where interest rates are today. You’d be hard-pressed to find an economist who didn’t project that the Federal Reserve would make four to six rate cuts in 2024. But that hasn’t been the case.

If you’ve followed the news, you know that we haven’t been able to tame inflation enough. The fact that the Fed has held off on rate cuts this far into the year was definitely unexpected based on most predictions from 2023. Last fall, I thought we would’ve been at the low 6% range by now for interest rates on a 30-year fixed mortgage. But today, we’re actually in the 7.5% range.

However, as I said before, despite these headwinds, people are still buying homes this spring and early summer.

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Q3 & Q4 2024 Housing Market Predictions

Looking into my sometimes trusty crystal ball, I think rates will stay elevated for the majority of the year. I believe this will have a dampening effect on the summer and fall housing markets. Nothing doom and gloom, just more of a modest market than we might’ve hoped for a year ago. Inflation can be sticky, and it’s hard on all American citizens, so the Fed wants to make sure they have it in check before they start lowering rates.

As a result of these elevated rates, I expect there may be opportunities, including things like incentives and buydowns, to help alleviate that financial burden so people can still buy the house they need. But I don’t expect any drastic changes in the rates themselves through the end of the year. I expect rates to be less than 7.5% by year’s end, and if I had to make a best guess, I’d say we could see them come down to around the mid-6’s by then.

Wildcards to Watch for This Year

First, let’s talk about the elephant in the room: the presidential election in November. And here’s the thing. The election will be dramatic, it’ll make a lot of headlines. But ultimately, it’s likely not going to stop people from moving forward with their lives and making financial decisions at the right time for themselves or their families.

At the end of the day, the president has less impact on the economy than many people think. They often get too much credit when the economy is good and too much blame when the economy is bad. In the United States, monetary policy is determined by the Federal Reserve, not the president. Yes, the president appoints the Federal Reserve’s board of governors. But the Fed is independent, has its own mandate, and is allegedly not to be swayed by any political party. 

So, don’t wait around for November thinking the outcome of the election will dramatically influence your financial decisions. If you still need to buy a home, you’re going to buy a home. If it’s the right time for where you’re at in life, you’re still going to take that exciting new job or retire and downsize, regardless of who’s in office. That’s not to say the election is inconsequential. But I don’t see it completely turning the market on its head.

A Final Word of Encouragement

Don’t overthink it. If you’re ready to buy a house and you can afford one given today’s rates, don’t gamble and try to time the market. You never know what might happen, and it might not work in your favor. Remember, life goes fast. Just do what makes sense for you or your family now, and if rates go down, you can always refinance!

That’s all we have for our 2024 mid-year housing market report! A big thanks once again to Chris Kincaid for being so generous with his knowledge and walking us through all the complexities of the current housing market — and for giving us a good dose of common sense and encouragement, too!

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If you have any questions or you’re curious about what it would take to purchase a home in one of Pahlisch’s beautiful communities in Oregon or Washington, contact one of our New Home Specialists today.

And don’t forget to follow us on Instagram, Facebook, Linkedin, and Pinterest to see what life could look like for you in a Pahlisch home!