Both the National Association of Realtors® (NAR) and realtor.com are expecting a likely turnaround in home sales next year.

Mortgage rates are expected ease further next year, helping to entice buyers to return to the market. It is believed that mortgage rates peaked at 8% this past year and will contiue to fall. Mortgage rates are extremely influental on buyers, and as a result of rates sliding, contract activity has been on the rise across the Charlotte region.

• Pending contracts show buyer demand. And contracts rose 3.9% year-over-year in Nov. Contracts are seen as a good measure of future sales since in a normal market these transactions tend to close in 45-60 days. In the Charlotte market, contract to close time has been a bit faster since the pandemic. Days on Market are trending at 35-36 days in the last few months. Contracts also rose for the first time in Mecklenburg County this past November.

• New Listings are on the rise. New listings signal seller activity. And we need consistent new listing activity to replenish inventory and supply, which has been and still is, challenged.
  • Sellers were reluctant to list during the pandemic, due to how quickly homes were selling, leaving them little time to find their new home, and this worsened when our inventory became challenged.
  • Sellers have been and are still reluctant to list, due to how quickly rates moved up throughout 2022 and 2023. This is largely because a number of sellers purchased their homes 3-5 years ago, when rates were much lower. 
  • However, both buyer and seller activity rose as a result of rates moving down in October and November.

• NAR expects the 30-yr fixed to average 6.3% in 2024, while realtor.com expects the rate to be about 6.5%. National data shows that rates near 6.6% enable the average homebuyer to afford a median-priced home without devoting more than 30% of their income to housing. Either way that’s good news for both buyers and sellers looking to make a move next year.

• Realtor.com predicts rates will remain elevated, averaging 6.8% in 2024 and ending the year at about 6.5%.

• There’s some good news with regard to rates, but buyers and sellers will sƟll have some challenges. Both NAR and realtor.com are predicting sales to be lower than previous years.

Prices softened in 2023 and this correction will continue in 2024. November’s median sales price for a home in the Charlotte region declined less than a percent (down 0.8% year-over-year) to $379,000.

• Realtor.com economists have said that since Charlotte experienced a “boom” in buyer demand during the pandemic, home prices increased sharply and as a result, our inventory suffered.

• With inventory severely challenged in 2022 and 2023, price growth softened, as buyer demand declined due to the lack of affordability. So, our market is expected to continue to see this correction continue in 2024.

• Buyers shouldn’t expect prices to fall dramatically, because the Charlotte market has historically had enough demand to keep that from happening.

• Sellers, who have been sitting on record home equity over the past few years, shouldn’t worry about falling home values. They will definitely need to work with their listing agent to make sure that the home is priced well, down to the neighborhood level.
  • In November the median price of a home in Mecklenburg County was $421,000; the price of a home in the city of Charlotte $401,000 – both of these price indices increased a percentage point over last year, however this is due to tight inventory.

• List Price-to-Sales Price ratios over the last couple of years remains high – in November it was 96.9 percent, which means that sellers are receiving nearly all of asking prices for their homes. While this metric may fall a point or two, it is still expected that sellers in the market will continue to receive most of asking prices for their homes.

Inventory and Supply will continue to grow slowly, but will remain challenged.

• Currently the 16-county region had about 6,500 homes for sale at report time (Nov. 5, 2023), and 1.9 months of supply.
• Mecklenburg County, has about 1.4 months of supply and about 2,100 homes for sale in November.
• Without consistent New Listing activity over time, then supply and inventory will remain a challenge for perspective buyers in the Charlotte market.
• So, there’s a balancing act here -- when demand rises, and inventory is low, prices will rise. When demand is steady, but not as strong as previous years, and sellers start to list, adding to inventory, prices soften.
• Ideally, we need to see inventory and supply increase, and move more towards a “balanced market”, which is close to 6 months of supply, and neither favors sellers nor buyers. But we are a long way from that, and will sƟll have a seller’s market next year. 

Challenging market in 2024.

• Buyers may have less competition. Though buyer demand is rising, its less than it has been in years past. If demand remains low, then buyers next year can expect less competition when shopping for homes. Working with a Buyer’s Agent, will help prepare buyers.

• The 2024 housing market likely will remain challenging, particularly for first-time buyers who are unable to leverage the proceeds from a previous home sale.

• Inventory remains the top hurdle, because homeowners have been reluctant to list, especially those locked into record-low rates from a few years ago.

• Furthermore, homebuilders have underproduced for decades, leading to a shortage naƟonally. Here in the city of Charlotte we are underbuilt by 10,000 units, according to the most recent State of Housing in Charlotte report. But we do expect housing starts to continue picking up, especially in the outlying counties where there is more land. Current homeowners are positioned well, as rapid home appreciation will continue in 2024.

• Home appreciation has jumped by 5% over the past year alone and the typical homeowner has accumulated more than $100,000 in housing wealth over the past three years.

• Plus, the wealth comparison between homeowners and renters continues to be significant: The typical homeowner has $396,200 in wealth versus $10,400 for renters, according to Federal Reserve, which means that owning real estate continues to help homeowners build wealth over time.

In summary, rates should fall, demand should will risw - but not to the level we saw during the pandemic, prices should soften a bit, and inventory will continue to increase slowly throughout the year. No major breakthroughs are expected in the 2024 market, but it should continue moving in the right direction – that is current housing dynamics are expected to improve.