‘Tis the season for new year predictions! The California Association of Realtors has released its 2024 forecast, which calls for both sales and prices to increase on an annual basis across the state.
The baseline scenario sees an increase in existing single-family home sales of 22.9 percent next year to reach 327,100 units, up from the projected 2023 sales figure of 266,200. The 2023 figure is 22.2 percent lower compared with the pace of 342,000 homes sold in 2022.
The California median home price is forecast to rise 6.2 percent to $860,300 in 2024. CAR notes that a persistent housing shortage and a competitive housing market will continue to put upward pressure on home prices next year.
“2024 will be a better year for the California housing market for both buyers and sellers as mortgage interest rates are expected to decline next year,” said CAR President Jennifer Branchini. “A more favorable market environment with lower borrowing costs, coupled with an increase in available homes for sale, will motivate buyers and sellers to reenter the market next year. First-time buyers who were squeezed out by the highly competitive market in the last couple of years will try to attain their American dream next year. Repeat buyers who have overcome the “lock-in effect” will also return to the market as mortgage rates begin to trend down.”
The report also anticipates that housing supply in 2024 will remain down despite a projected increase in active listings of between 10-20 percent, as market conditions and the lending environment continue to improve.
“With the economy expected to soften in 2024, the Federal Reserve Bank will begin loosening its monetary policy next year. Mortgage rates will trend down throughout 2024, and the average 30-year fixed rate mortgage could reach the mid-5 percent range by the end of next year,” said CAR Senior Vice President and Chief Economist Jordan Levine. “Buyers will have more financial flexibility to purchase homes at higher prices, which could generate increased housing demand and result in more upward pressure on home prices.”