The rise in mortgage rates in 2023 — they peaked at 8% in October — brought the Triangle's hot real estate market to a halt. However, with interest rates falling back into the 6% range, sales and competition are expected to pick up again in 2024.
Mark Parker, vice president of sales at Coldwell Banker HPW's Midtown office, said he saw 20 people at an open house for a home in Raleigh's Glenlake South neighborhood on Saturday. This holiday weekend turnout gives cause for optimism for the new year.
“If you had asked me the same question two months ago, I wouldn’t have been as optimistic as I am now,” Parker said. “A lot of it has to do with interest rates.”
As the Federal Reserve keeps its interest rate stable and inflation begins to subside, mortgage rates fall. This trend is expected to continue until 2024.
“I think it will be a very robust market,” Parker said. “We may not see quite the madness that we saw in 2022 and early 2023, and that has primarily to do with the homes on the market.”
That madness — record-breaking mortgage rates combined with high demand for the few homes that came onto the market — led to bidding wars and buyers lining up for open houses, especially those at lower prices.
Real estate agent Derrick Thornton doesn't expect such an uproar to occur in 2024.
“I don’t think it will be that crazy,” he said, “but there will definitely be a lot of multiple offers and there will be a lot of excitement in the market when interest rates actually start to come down.”
Hunter Boyd, who helps buyers get a home loan through Clear Mortgage's Sherry Riano team, says a 6% interest rate seemed high in 2022 but seems more reasonable now.
Boyd's office saw a 40% increase in the number of mortgage applications last month. Buyers who sat idly by as interest rates rose are now looking for a home again.
“Normally the week between Christmas and New Year is very quiet,” he said. “This year we had several new mortgage applications every day and several people went under contract between Christmas and New Year.”
“We have seen a dramatic increase in prices coupled with the increase in tariffs. That reduced someone’s purchasing power. Now that these interest rates are coming down, it is much more affordable for consumers to purchase a home in today’s market,” Parker said.
As home buying becomes more affordable, more are available. As of Jan. 1, there were more than 7,000 homes on the market in the Triangle. Last year there were just 2,300.
This is good news for buyers and sellers.
The National Association of Realtors predicts the average sales price for a home in 2024 will increase 3.6% in the Raleigh-Cary market and 5.8% in the Durham-Chapel Hill area.