Article first appeared: https://www.realtor.com/news/trends/real-estate-busy-fall-2024-buyers/

Real Estate’s Sluggish Summer Will Give Buyers a Jump in the Fall

High mortgage rates put the real estate market in a slump in the final month of summer—but, they could also provide a runway for buyers to jump into a less competitive market in the fall.

Homes spent 53 days on the market in August, the longest time for the month in five years, according to Realtor.com® data. There were also a staggering 19.3% of listings with price cuts, the highest level for the month in five years.

“August marks a notoriously sluggish time for sales here in New York City, but this was a particularly slow summer,” says real estate agent Alison McQueen, a licensed associate broker at The Corcoran Group.

It’s not all bad news, though, and it means that buyers can now take their time shopping for a new home in the fall.

“This fall could be busier for the housing market than this season typically is, but it’s still likely to be a less competitive time, which makes it ideal for flexible buyers,” says Realtor.com Chief Economist Danielle Hale.

And there might be a silver lining for sellers as well.

What happened in August?

The record slowdown in August can be firmly blamed on high mortgage rates.

“The housing market slowed considerably as both buyers and sellers patiently wait for a lower mortgage rate environment,” says Realtor.com® senior economist Ralph McLaughlin in his analysis.

The Federal Reserve’s mid-September policy meeting is quickly approaching, and rates are expected to drop. (While the Fed doesn’t set mortgage rates, the two numbers often move in the same direction.)

Realtor.com economists predict rates will fall to 6.3% by the end of 2024. And once rates drop, expect the market to kick up a notch.

Here’s what to look for in the autumn real estate season.

Housing stock will increase this fall

A not-so-buyer-friendly thing that happened in August? New listings fell.

Home sellers pulled back, with 0.9% fewer new homes listed on the market compared with last August, marking the first negative reading in nearly a year.

However, as rates tumble, more homeowners might finally be willing to part with their existing low rates and put their homes on the market.

“There’s a stalemate in the marketplace due to the higher differential of 2024 interest rates versus 2021 interest rates,” says Jeff Lichtenstein, broker and owner of Echo Fine Properties in Palm Beach Gardens, FL. “That 4% spread has homeowners holding on to the current rate like Gollum held onto his precious ring in ‘The Lord of the Rings.’”

Indeed, a recent Realtor.com analysis found that 86% of homeowners have mortgage rates below 6%—so many feel “locked in” until rates dip.

This fall, the number of homes for sale is likely to climb, “but part of why we’ll see this is because it will take homes longer to sell,” explains Hale.

Market pace is expected to pick up

In August, homes lingered on the listing pages for nearly a week longer than was typical last year.

In the fall, “time on market typically increases, so buyers are likely to have even more time to make decisions,” says Hale.

Even though falling rates could bring a slew of home shoppers back to the market, that doesn’t necessarily mean houses will instantly start selling like hotcakes.

In fact, the presidential election just might make some buyers hold off until Inauguration Day 2025.

“Many buyers are seeking stability and may choose to wait until there is more certainty about who will be in office before making any major financial commitments,” says Aaron Buchbinder, a real estate agent at Compass in Boca Raton, FL.

However, buyers who are ready to act now have “a prime opportunity to secure a property while competition is slightly lower and rates are trending downward,” he adds.

Home prices could see a bump in the fall

When mortgage rates take a dip, competition ramps up, and so do prices, since bidding wars will likely resume, according to Jason Gelios, a real estate agent with Community Choice Realty in Southeast Michigan.

But buyers offering the asking price won’t happen right away.

In the fall, “you will have a slight increase in confidence from both homebuyers and sellers,” says Gelios. And that, in turn, might bump prices up slightly.

Sellers will need to stand out

High home prices and low housing stock have supported a seller’s market for years now, but that might be on the brink of change.

“The data reflects that buyers are pickier in the housing market today, and sellers have to adjust in order to stand out,” says Hale.

This might mean slashing prices further, upping curb appeal, and remaining patient for offers.

“Gone are the days when sellers just had to put a sign in their yard and have multiple offers,” says Christine Dupont-Patz, broker associate and co-owner of Re/Max of Cherry Creek in Denver.

Buyers, save your searches!

Fall could be frustrating if you’re a home shopper with specific needs. It might seem like you’re looking at the same homes over and over.

Buyers can channel this frustration to reevaluate their must-have versus nice-to-have list and then use these findings to save a specific real estate search.

“They’ll be notified when listings that meet their criteria hit the market, and they won’t be distracted by homes that just aren’t a good fit,” advises Hale.

The growing number of homes for sale and the potential for further mortgage rate declines on the horizon might mean that buyers feel less pressure to buy now or else miss the opportunity entirely.

“While this may mean slower market sales activity, it likely also means shoppers who do buy in this environment have more time to make decisions and may feel more confident in their purchase if they choose to make one,” says Hale.