The third quarter of 2024 saw the U.S. real estate market navigating a mix of challenges and positive shifts. Although housing inventory saw notable increases, high prices and mortgage rate changes have been key in shaping the market, albeit slowly, during the last quarter.
Inventory Growth and Market Balance
One of the key developments in Q3 2024 was the significant growth in housing inventory. The number of homes actively for sale jumped by 22.9% compared to the previous year. This growth was especially pronounced in September, driven by a drop in mortgage rates, which helped erode the “rate-lock” effect that had kept many sellers on the sidelines. This “lock-in” effect occurs when homeowners with low mortgage rates hesitate to sell, as they face significantly higher borrowing costs on a new home.
Despite these gains, inventory remains 23.2% below pre-pandemic levels. This slow but steady recovery is a sign that the market is moving toward a more balanced state. However, the market still favors sellers, particularly in high-demand regions.
Impact of Falling Mortgage Rates
Mortgage rates played a pivotal role in shaping the market during the third quarter. The Federal Reserve’s decision to cut interest rates by 50 basis points in September led to a marked decrease in mortgage rates, reaching their lowest levels in two years. This provided a much-needed boost in buying power for sidelined buyers and sparked increased market activity. The number of pending home sales (homes under contract but not yet closed) rebounded, increasing by 3.5% in September year-over-year - a stark contrast to the modest 0.3% gain seen in the previous month.
Home Prices and Affordability
Home prices remained resilient in Q3 2024, continuing to rise but at a slower pace. Nationally, home prices increased by 3.9% year-over-year in August 2024 and are expected to rise by another 2.3% by August 2025, according to CoreLogic. While inventory growth and declining mortgage rates will offer relief to some buyers, the steady price growth still poses challenges for buyers, particularly in high-demand areas.
Shift Toward a More Measured Market
While inventory increases and falling mortgage rates suggest a more balanced market, the recovery remains uneven. Regional variations persist, with some markets, particularly in popular metropolitan areas, still facing strong demand and limited supply, while others are experiencing more stagnation. Investor activity has also cooled, contributing to a more measured pace of market recovery compared to the rapid post-pandemic surge.
NAR Agreement and Buyer Representation Changes
The National Association of Realtors (NAR) agreement and buyer representation agreements are key documents that define the relationship between real estate agents and their clients, whether they are buyers or sellers. On August 17, 2024, changes were introduced to align these agreements with evolving legal standards, market dynamics, and new technological tools used in real estate transactions.
The NAR Agreement updates focus primarily on three areas. First, agents are now mandated to provide clearer information about their relationships and roles when representing buyers and sellers. Although commission has always been negotiable between buyers, sellers, and their agent, they must also offer more detailed breakdowns of commission divisions between buyer and seller agents. Second, the language around the use of technology has been expanded, particularly in reference to online services and tools that facilitate the real estate process. Finally, provisions for protecting consumer data have been strengthened, specifying how personal information is stored, shared, and managed. At the same time, disclosure requirements have been enhanced to ensure greater transparency throughout the transaction.
DMG’s Unwavering Commitment
While recent market changes following the NAR settlement aim to raise the bar for agent professionalism, DMG has consistently held itself to even higher standards, long before these new benchmarks were set.
We believe that this commitment to excellence is what led to DMG’s most successful third quarter in our nearly 22-year history. While the media and many in the real estate industry are sounding alarms about a market downturn, that’s not the case for us. Why? Because we are a force multiplier. In the military, force multiplication refers to strategies that make a team exponentially more effective. We embody that concept in representing our clients.
We’ve been a part of these communities for years, understanding every home and every buyer, inside and out. Our connections are your solutions. If you’re searching for something off the market, reach out to us. If you’re a buyer, we know where your perfect home is. If you’re a seller, we have your buyer.
Founder of the Dawn McKenna Group
of Coldwell Banker
