Demand will continue to exceed supply through the first half of 2024, but expect inventory to loosen as would-be sellers from the past two years step down off the fence. Compared to 2022, 2023 finished strong with its new listings, showings, pendings and prices. Expect that energy to carry over into the first half of 2024. Interest rates are also coming down. They’re expected to drop below 6% sometime in the second half. All of this should make for a strong and more balanced market ahead.

Strong Showing Activity

Monitoring weekly showings helps us measure buyer demand. Inventory has been dropping compared to prior years—down 25% compared to 2019 and down 10% over the past two years. Despite recent inventory shortages, December showings have been remarkably strong and that has carried over into the first few weeks of January. The recent dip was due to poor weather and recent weekend distractions caused by our Lions. The chart below illustrates upper-end activity. Over-$750k showings are running two to three times what they were prior to the pandemic. Expect strong demand to carry over across all price ranges through the first half of 2024. Activity growth the upper-end market is even more impressive. Showings for properties over $750,000 have more than doubled since before the pandemic and activity will continue to increase every month.

Inventory Shortages Expected to Ease

Through 2023, inventory shortages continued to hold the market in a gridlock. Despite the huge audience of buyers, sellers are afraid to sell when they have so few options for their replacement homes. They have also been hesitant to give up their current low interest rates and capped taxes. But as life goes on and their needs continue to change, expect to see more sellers move off of the fence in 2024. Rate adjustments that are expected to have mortgage interest rates under 6% by the end of the year will also help.

New listings and inventory levels will gradually rise through the year. The market will be more balanced, but demand will continue to exceed supply. Prepare for bidding wars through the first half of the year with additional flurries activity with individual rate drops.

Prices Rising

Average sale price and price per square foot rose by four to five percent in 2023. Compared to the prior year, monthly price increases were modest in the first quarter, picked up as the year progressed and finished strong in November and December. Expect that momentum to carry over into 2024. We’re expecting prices to rise another five to seven percent in 2024.

Half of December closed sales were at or above asking price. That’s up slightly from 46% in 2022. Typical non-pandemic numbers should be around 25 or 30%. Another indication that the market is carrying positive energy into 2024.