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Housing forecast for the remainder of 2024

Puget Sound Housing Market Brief - 2024 Outlook

In 2023, the Puget Sound region recorded historically low numbers of single-family home sales, a trend largely attributable to higher interest rates and buyer’ affordability challenges. The high interest rates have led to fewer sellers entering the market (many don’t want to let go of their 3, 4 or 5% interest rates), contributing to an overall scarcity in supply.

As we progressed through the first quarter of 2024, this trend intensified, with the number of sales down an additional 5% from last year's record lows. Despite the slowdown in sales, housing prices in many neighborhoods are reaching new highs, driven by limited availability. Consequently, we predict that home prices will continue to rise, slowly this year, while the number of sales will be the same or lower than compared to 2023.

Looking ahead: the forecast is interest rates will remain well above 6% with any potential interest rate reduction unlikely this year. However, when rates do decline, maybe in 2025, a surge in buyer purchasing power will be realized. This, coupled with accumulated demand from previous years, could propel housing prices higher.

More sellers will be motivated to move away from their low pandemic-era interest rates into slightly higher rates in the 5% to 6% range, but the influx of buyers is likely to outstrip the number of available homes.

Key Takeaways for 2024:

Continued price increases due to high demand and limited supply.

Stable or decreasing sales volumes.

Interest rates to remain over 6%.

In summary, while the Puget Sound housing market faces challenges from limited inventory and high rates, the underlying demand suggests sustained price growth.

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