2024 Q3 housing market trends: Prices and rates remain high

Vacationers aren’t the only ones feeling the heat this summer. Many homebuyers are sweating it out too, in the hopes they can afford a home — especially considering that, per the most recent National Association of Realtors data, the median price for existing homes is now a record-high $419,300. And there are few indications that prices, or mortgage rates, will drop anytime soon.

What housing market trends can buyers and sellers expect over the next three months? Here are the latest predictions and prognostications from industry experts.

Q3 2024 housing market trends: What to expect

Typically, the third quarter sees the end of spring/summer’s peak real estate season.

“Supplies of homes for sale generally rise during the peak summertime buying season, largely because it’s the most popular time for families to be out looking for new places to live before their children return to school,” says Rob Barber, CEO of real estate data company ATTOM. “Home prices also tend to rise most during the summer amid that period of higher demand among home seekers.”

Dennis Shirshikov, an adjunct professor of economics at City University of New York, notes that higher demand makes the already-challenging real estate market even more so: “Housing supply tends to tighten, leading to increased competition among buyers,” he says.

However, Q3 of 2024 could deviate from the norm, some believe. Rick Sharga, president and CEO of CJ Patrick Company, is among them: “Since the COVID-19 pandemic, seasonal patterns haven’t held true,” he says. “While historically, home sales have risen in the second and third quarters before declining in the winter months, we’ve observed home sales peak in January or February and then decline each month for the balance of the year,” Sharga notes. “The same pattern appears to be emerging in 2024, where the volume of sales seems to have peaked in February.”

As real estate trends stand right now, mortgage rates remain high and record home prices continue to pose a major financial hurdle for potential purchasers. Consequently, Barber says, it’s a fair bet that increases in home prices and sales could be smaller this summer versus recent years.

Q3 mortgage rate projections

As of June 19, the average rate for a 30-year fixed mortgage was 7.03 percent while a 15-year fixed mortgage was 6.38 percent, according to Bankrate’s latest survey of large lenders. In mid-June 2022, the 30-year figure was just 5.78 percent. Do experts see any chance of mortgage rates dropping this quarter?

“We could see a little bit of a drift downward in mortgage rates, especially if inflation data cools and the Federal Reserve gets serious about rate cuts,” says Ted Rossman, a senior industry analyst for Bankrate. “But we’ve seen this movie before, and ‘higher for longer’ is ruling the day right now. As we entered 2024, there was ample hope that the average 30-year fixed mortgage rate could fall below 6 percent by the end of the year. However, based on recent trends, we might not see that figure until the second half of 2025.”

Rossman expects benchmark 30-year fixed rates to average in the high 6 percent to low 7 percent range over the next three months, versus an average in the low 6 percent range for the 15-year home loan.

Sharga is also doubtful that rates will begin to decline significantly in the near future: “It’s likely that rates on the 30-year fixed-rate mortgage will remain between 7.0 and 7.5 percent through the third quarter, with 15-year fixed-rate mortgages averaging between 6.25 and 6.75 percent,” he predicts.

Molly Boesel, principal economist for CoreLogic, says she anticipates a 6.85 percent average rate for the 30-year mortgage.

Where home prices are heading

Home prices typically increase during peak season, anyway, and with inventory still relatively scarce, there’s not much hope of them lowering substantially this quarter.

“Prices in this quarter are expected to increase 5.9 percent from a year ago and 1.5 percent from the prior quarter, based on CoreLogic data,” says Boesel. “I also expect homes to continue to sell quickly, but with inventories remaining low, sales should only be up 5 percent in the third quarter versus a year earlier.”

However, Sharga notes an interesting abnormality related to the market’s volatility of late: “According to Altos Research, almost 35 percent of listed properties have had a price reduction, which is a higher percentage than usual for this time of year,” he says. “That’s not necessarily indicative of a pending price drop for the housing market nationwide, but it could be a sign that prices are finally starting to become a bit more rational.”

Housing inventory predictions for Q3

Don’t count on the supply of homes rising substantially between July and September. The pros we spoke to agree that inventory is likely to remain much lower than needed.

“The good news is that supply is up about 35 percent from 2023 levels,” Sharga says. “But it remains at less than a three-month supply nationally, which is half of what we’d see in a market where there is equilibrium between buyers and sellers. Inventory is especially constrained at the entry level, where there is almost nothing for sale — this fuels competition among consumers and investors looking for those scarce properties.”

Owners who bought when home mortgage rates were low have little incentive to sell and then face a higher rate when purchasing their next home. “Nearly 40 million purchase loans were issued by lenders during the long stretch of low rates, according to ATTOM data, which means that tens of millions of owners are sitting pretty in that situation,” Barber says. “That helps explain data from the St. Louis Fed showing that the number of homes for sale is down about 50 percent from five years ago. New home construction fills some of this need, but probably won’t be enough to make up the difference.”

Strategies for homebuyers and sellers

If you’re hoping to buy a home, don’t despair — but be realistic when it comes to prices, rates and competition this quarter.

“Be patient and strategic,” says Shirshikov. “With mortgage rates likely to be higher, it’s crucial to shop around for the best rates and think about locking in a rate if you find a favorable one. Focus on properties that have been on the market for a while, as sellers might be more willing to negotiate.”

Carefully consider your personal finances as well: “If you have a sufficient down payment and enough savings to cover maintenance, utilities, insurance, furniture and other homeownership expenses — and if you plan to stick around for a while — then maybe you should purchase right now,” Rossman says. “Just don’t get overextended financially. A bonus is that you might be able to refinance in a year or two if rates drop.”

Sellers, meanwhile, would be wise to consider timing. “The third quarter is the end of the peak season for many sales and prices,” Boesel says. “Moving closer toward the end of the year, you are likely to see slightly longer times on the market and lower prices compared to the summertime.”

If you’re angling to sell soon, don’t forget to figure out where you’ll go next — and the cost of doing so. “While it would be nice to sell your current home for a lot more than you paid for it, whatever you are going to buy next has probably gone up a lot in price as well,” says Rossman. “The ideal scenario [would be] downsizing or moving to a cheaper part of the country. But if you are staying in the same area and trading up to a more expensive home with a higher mortgage rate, remember that that’s going to be tougher to afford.”