High mortgage rates caused a slump in the real estate market during the final month of summer, with homes lingering on the market longer and more listings seeing price cuts. However, the slower market could present a unique opportunity for buyers this fall.
Summer Slump Sets the Stage for Fall Opportunities
In August, homes spent an average of 53 days on the market, the longest for the month in five years, and 19.3% of listings experienced price cuts—the highest level in five years, according to Realtor.com data. Realtor.com Chief Economist Danielle Hale notes, “This fall could be busier for the housing market than this season typically is, but it’s still likely to be a less competitive time, which makes it ideal for flexible buyers.”
High Mortgage Rates Stall the Market
The slowdown in August is largely attributed to high mortgage rates, which caused both buyers and sellers to hesitate. “The housing market slowed considerably as both buyers and sellers patiently wait for a lower mortgage rate environment,” explains Realtor.com senior economist Ralph McLaughlin. Mortgage rates are expected to fall, potentially reaching 6.3% by the end of 2024, which could stimulate more activity in the market.
Increased Housing Stock Expected This Fall
Despite the slower summer, fall may bring a boost in housing stock as rates drop and homeowners reconsider selling. New listings fell by 0.9% in August compared to last year, but as mortgage rates decline, more sellers may be willing to part with their existing low-rate mortgages. Jeff Lichtenstein, a broker in Palm Beach Gardens, FL, likens homeowners’ reluctance to sell to “Gollum held onto his precious ring in ‘The Lord of the Rings,’” highlighting the strong attachment to current low rates.
Market Pace May Increase, but Not Drastically
Homes stayed on the market longer in August, and while time on the market usually increases in the fall, buyers will likely have even more time to make decisions. Some buyers might still hold off due to the upcoming presidential election, seeking stability before making major financial commitments. However, those ready to act now can take advantage of lower competition and improving rates.
Home Prices Could Rise Slightly in the Fall
Falling mortgage rates might spur more competition, leading to potential price increases, though bidding wars aren’t expected to return immediately. Jason Gelios, a real estate agent in Southeast Michigan, predicts a slight bump in home prices as confidence grows among both buyers and sellers.
Sellers Need to Stand Out
The market dynamics that have favored sellers for years may be shifting. As buyers become pickier, sellers need to adjust by enhancing curb appeal, pricing competitively, and being patient for offers. “Gone are the days when sellers just had to put a sign in their yard and have multiple offers,” says Christine Dupont-Patz, broker associate at Re/Max of Cherry Creek in Denver.
Buyers Should Save Their Searches
For buyers with specific needs, fall could feel repetitive as inventory changes slowly. Hale advises buyers to save targeted searches that match their criteria to stay informed without being overwhelmed by unsuitable listings.
Outlook for Fall Real Estate
With an increase in housing stock and potential declines in mortgage rates, the fall season could provide buyers with more time and options to make confident decisions. While the market may not see a dramatic uptick in activity immediately, it presents a prime opportunity for those ready to buy amid less competitive conditions.
