According to the latest report from the National Association of Realtors® (NAR), after five consecutive months of decline, existing home sales in November increased by 0.8% compared to the previous month, reaching a seasonally adjusted annual sales rate of 3.82 million units.

This data brings a ray of hope, suggesting that the U.S. real estate market may finally be bottoming out and is poised for a slow and steady recovery starting next year. However, it's essential to recognize that despite the anticipated record-low levels of home sales for the entire year of 2023 since the housing crisis in 2011, the market outlook is gradually improving.

The recovery of the real estate market is largely dependent on the trend of mortgage interest rates. According to data from Freddie Mac, as of October this year, mortgage rates had reached their highest point in decades, with an average rate of 7.49% for a 30-year fixed-rate mortgage.

However, from that time until the week of December 21, rates have dropped to 6.67%. This rate decline provides some relief for those contemplating home purchases and attracts more buyers to move from the sidelines.

In fact, the NAR report for November reflects the bidding process of buyers during most of October when mortgage rates were at their highest in 20 years. Lawrence Yun, Chief Economist at NAR, pointed out in a Wednesday press conference that a noticeable turning point is expected with the recent sharp decline in mortgage rates.

Hannah Jones, an economic research analyst at Realtor.com®, believes that the NAR report signals positive prospects for the housing market in 2024. The data indicates that the decline in mortgage rates has impacted buyer activity.

While seller activity remains restrained, existing home sales data shows that buyers are ready to respond to more affordable housing conditions. Although buyer activity may still be relatively low, any measures to improve housing affordability could potentially bring more buyers into the market.

However, those planning to purchase homes in 2024 should be aware that they may still face significant challenges. Firstly, mortgage rates may decrease but remain relatively high, potentially leaving many current homeowners feeling "locked in" with their current homes and low-rate mortgages.

Additionally, once mortgage rates do decrease, the market may open floodgates, intensifying competition among buyers and potentially driving up housing prices. As long as economic capacity improves, there is a possibility of continued warming in housing activity. If the growth rate of buyer demand exceeds the growth rate of available inventory, prices may rise faster, offsetting the savings from lower mortgage rates.

It's worth noting that NAR data for November shows a median sales price of $387,600 for existing homes, a 4% increase from the same period last year, despite a slight rise in mortgage rates during this period.

For those ready to purchase, now may be an opportune time to act and take advantage of falling rates. For those who prefer to wait, there is a glimmer of hope: spring may bring increased competition, but inventory may also rise, providing more choices for buyers.