As we approach the end of 2024, the U.S. housing market presents a mixed picture for potential homebuyers. The good news is that mortgage rates, which soared to multi-decade highs earlier this year, have started to come down. Currently hovering just below 6%, these falling rates are helping boost affordability and giving buyers more purchasing power. However, this relief is tempered by persistent challenges, most notably the continued rise in home prices and a shortage of available homes. The lack of inventory remains one of the biggest hurdles for the market. The U.S. is estimated to be 4.5 million homes short of a balanced supply. This shortfall is exacerbated by the “lock-in effect,” where homeowners with previously secured low mortgage rates are hesitant to sell, limiting the number of homes available on the market. While builders are working to address the supply issue, particularly through multifamily housing projects, it will take time for new inventory to ease market pressures. For renters, the increased construction of multifamily units has brought some relief. Rents have started to stabilize, and in some areas, prices have even seen a slight decline. However, for homebuyers, the competition remains fierce as prices are predicted to continue rising, though at a slower pace than in recent years. Looking ahead to 2025, experts predict further declines in mortgage rates and gradual improvements in the housing supply. While these changes may offer more opportunities for buyers, the road to affordability will still be a challenge for many.

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