Mortgage rates in MD will remain higher for longer, but there is good news, report shows

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Affordability will be the biggest challenge for the Maryland housing market for the remainder of 2024 and will keep overall home sales more muted than had been expected, according to a housing market forecast update released Thursday by Bright MLS, a North Bethesda-based multiple listing service. 

Although mortgage rate lock-ins will continue to keep some would-be sellers on the sidelines, life events have led others to sell, leading to a rise in housing inventory in most regions across the country, the report indicates.

Lisa Sturtevant, Bright MLS chief economist, said there is good news, though, for the Maryland market on the supply side going into the second half of 2024. With prospective homebuyers still facing record high home prices in some markets and mortgage rates that will remain in the high 6’s for most of the year, affordability is now the biggest challenge in the market.  It will force some buyers to delay their homeownership plans into 2025 or even 2026, she said.

Even with inventory growing nearly 14% by year-end, it is still low by historical standards, the report showed. The housing market will end the year with 20% fewer homes for sale than 2019, which means that while buyers will have more leverage, it is still technically a seller’s market.

Prices in Maryland and the mid-Atlantic region have risen strongly in the first half of 2024, but home price growth is expected to slow in the second half of the year. More supply and cooler demand will lead to less upward pressure on home prices. Although there are no signs of a major home price correction in the U.S., median prices will fall year-over-year in some markets where demand is weakening and inventory has increased significantly.

The mid-Atlantic housing market is something of a microcosm of the larger U.S. housing market, and 2024 forecasts for the region generally track in line with the U.S. outlook.

There are some pockets of the region where homes are relatively affordable and local economic conditions remain strong. In some of these more affordable markets, home prices will continue to rise briskly in 2024, while price growth in some higher-cost markets will slow. Overall, the median home price in the mid-Atlantic will rise by 3.3% in 2024, a slower pace of home price appreciation than last year, but closer to the longer-term average.

At the end of 2024, the supply of homes available for sale is expected to be up by 24.3%, compared to the end of 2023. Inventory is growing slightly faster than the U.S. overall with more new listings and a slightly slower pace of home sales activity. Despite the increase, inventory is still more than 30% lower than it was at the end of 2019.