Has the housing market finally turned a corner to end the year looking merry and bright?

A new report from the National Association of Realtors® has found that after five straight months of declines, sales of existing homes ticked up by 0.8% in November compared with the previous month, to a seasonally adjusted annual rate of 3.82 million.

This data, released on Wednesday, offers a glimmer of hope that, although home sales throughout 2023 are slated to be at their lowest levels since the housing crisis of 2011, America’s real estate market may have at long last hit bottom—and could be poised to begin a slow but steady recovery next year.

‘We expect the market will see small wins’

The real estate market’s recovery will depend heavily on mortgage rates—which reached a multidecade high in October with rates for a 30-year fixed loan averaging 7.49%, according to Freddie Mac.

Since then, rates have dropped to 6.67% for the week ending Dec. 21, providing some relief to homebuyers who are grappling with affordability and luring more home shoppers from the sidelines.

In fact, this November NAR report “still reflects the buyer bidding process in most of October when mortgage rates were at a two-decade high,” NAR Chief Economist Lawrence Yun noted in a press on Wednesday. “A marked turn can be expected as mortgage rates have plunged in recent weeks.”

Realtor.com® economic research analyst Hannah Jones also thinks the NAR report portends good things for housing in 2024.

“The data hints at the impact that falling mortgage rates will have on buyer activity,” Jones explains. “Though seller activity remains stifled, the existing-home sales data suggest that buyers are ready to respond to more affordable housing conditions. While buyer activity is likely to remain relatively low, any improvement in housing affordability is likely to bring more buyers into the market.”

As a result, “though housing affordability is likely to persist as a key challenge to prospective buyers next year, we expect that the market will see small wins with lower mortgage rates and softening home prices,” Jones adds.

What the latest housing data means for homebuyers and sellers

Yet wannabe buyers who’ve put a house on their wish list for 2024 should know that they might still face formidable challenges.

For one, mortgage rates might be falling, but they are still high enough that many current owners may feel “locked in” to their home and their current low-interest rate loan.

“The gap between the mortgage rate on the typical outstanding mortgage and today’s rate remains sizable, which will keep many sellers on the sidelines,” Jones explains.

Meanwhile, once mortgage rates do drop, this could release the floodgates and greatly increase competition among buyers, which could drive up home prices.

“Buyer activity is likely to continue heating up as long as affordability improves,” Jones warns. “If buyer demand picks up faster than for-sale inventory, it is possible that prices will rise more quickly, eliminating the savings from a lower mortgage rate.”

In November, NAR data shows that existing homes sold for a median price of $387,600. That’s 4% higher than a year earlier, even though mortgage rates have risen over that time.

The bottom line for home shoppers: Waiting until mortgage rates drop might backfire, so if they’re ready to buy a house now, they might want to get out there to stay ahead of the crowds that will no doubt arrive once rates subside. (Here are more reasons why buying a house now makes sense despite high rates.)

“Buyers should evaluate their finances and preferences to determine if they are able to find a suitable home in their budget in today’s market,” Jones urges.

For those who’d rather wait and see, there is a silver lining: “Though competition may heat up in the spring, inventory will likely pick up as well, offering buyers more options,” Jones says.

The lesson applies to homeowners, too: Those who put their house on the market now will likely enjoy less competition from other sellers, and that might result in higher profits.

“For homeowners considering a home sale, a well-priced, move-in ready home is likely to attract buyer attention,” says Jones. “Especially as for-sale options are scarce in many markets.”

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