US housing market to recover in second half of 2024
American home sales are expected to turn a corner in the second half of 2024 after being in something of a malaise, according to a market podcast by Morgan Stanley’s chief U.S. economist Ellen Zentner.
Like in the UK, the brakes have been put on the US housing market due to the rising Federal Reserve Rate, which have moved from 0.25-0.50% in March 2022 to 5.25-5.50% in July 2023.
Zentner said: “We expect home sales to be weak in the first half of next year, but activity should pick up in the second half and further into 2025, and that’s primarily because affordability will improve.”
As movement in the housing market has fallen a lot of the supply will come from new builds, as US housebuilding activity is expected to improve in 2024.
Zentner added: “Home prices should see modest declines as growth in inventory offsets the increase in demand. By 2025, with lower rates, existing home sales should rise more convincingly.”
She predicted the Fed to keep the national interest rate steady, until making a quarter point reduction in June next year.
US GDP growth should slow from 2.5% in 2023 to 1.6% in 2024 and 1.4% in 2025.