By Gay Cororaton, MIAMI REALTORS Chief Economist
Given the latest decision of the Fed’s Federal Open Market Committee to keep the federal funds rate unchanged in its January and March meetings, and taking available economic and housing sales data, we have revised the 2024 Outlook.
With potential interest rate cuts in the second half of 2024 and given Southeast Florida’s strong economic fundamentals, the revised outlook still projects a sales recovery and sustained price growth in 2024, although at a more modest pace than projected in December 2023. The single-family market will outperform the condominium market in terms of sales and price growth.
- Mortgage rates are likely to continue to decline to 6% by end of 2024 as the Fed could start to cut interest rates beginning in May and June.
MIAMI REALTORS® expects the 30-year fixed mortgage rate to decline to 6% by December 2024 and to average 6.4% in 2024. The revised forecasts are higher than the December 2023 forecasts for 2024 (5.25% year-end and 6.0% annual average) due to the recent uptick in inflation and the cautious approach of the Federal Open Market Committee (FOMC) to wait for more data to gain confidence that inflation is sustainably moving towards 2% . The FOMC held the federal funds rate at 5.25% to 5.5% in the past five meetings since September 2023 through March 2024.
- Existing home sales are likely to increase 3% as single-family sales increase 11% while condominium sales decline 5%.
Southeast Florida’s home sales are expected to increase 3%, a downward revision from the December 2023 projection of 7%. The downward revision takes in account higher mortgage rate forecast. Single-family sales are projected to increase 11% growth, while condominium and townhome sales are expected to decline 5% as buyers wait out the cost implications of the condominium regulations. A minor adjustment was made to the growth forecast to account for the decoupling of buyer’s and seller’s agent commissions that go into effect mid-July. It is difficult to quantify the effect of the new rule currently, but NAR and the state and local associations are working with industry stakeholders to minimize the disruption.
- Home sales prices are likely to increase a modest pace of 4% as single-family home prices increase 7% while condominium prices rise 1%.
Home sales prices are expected to increase at a modest single-digit pace of 4%, revised downwards from the 5% projection in December 2023. The median single-family sales price is expected to increase 7% while the softer demand for condominiums/townhomes will hold down the price appreciation to a modest 1%.
- The single-family market is likely to remain a seller’s market with 4 months’ supply while the condominium/townhomes market will be a balanced market with 8 months’ supply.
The decline in mortgage rates to below 7% in March 2024 from nearly 8% in October 2023 appears to have coaxed some homeowners to put their properties on the market. More supply could be unlocked as interest rates fall in the second half of the year.
Months’ supply is projected to average at four months in the single-family market and eight months in the condominium market based on market developments in January-February 2024, with tighter conditions for single-family homes below $400,000.
- Southeast Florida is poised to continue to have strong economic fundamentals in 2024.
Southeast Florida’s economic fundamentals remain strong, marked by strong job growth, a rising population, and improvements in transportation and infrastructure that enhances the efficiency and mobility of people and goods.
