With new real estate commission rules taking effect and mortgage rates cooling, the U.S. fall real estate market is gearing up for notable changes. We talked with Kendall Bonner, eXp Realty’s VP of Industry Relations, to find out what challenges, shifts, and trends homebuyers and sellers need to know about for the upcoming fall market. Here’s what to look out for:
Biggest Challenge for Buyers and Sellers? Adjusting to New NAR Settlement Rules
New rules from the National Association of Realtors (NAR) settlement went into effect on August 17, changing how commissions are paid out to real estate agents. Previously home sellers typically covered the cost of both the seller’s and buyer’s agent commissions, but the new rules are expected to change that. One of the key changes is the prohibition of broker compensation offers on multiple listing services (MLS), meaning buyers are now more likely to cover broker commissions themselves.
Buyers Must Be Crystal Clear on Signing Agreements
Another significant change is the new buyer representation agreement. “The biggest challenge for a buyer this fall is going to be understanding that before even viewing a home, real estate agents are now required to have a buyer sign a buyer representation agreement,” explains Bonner. This agreement helps to make commission fees more transparent and will clearly lay out the agent’s responsibilities, but it also means buyers may be responsible for paying some or all of their agent’s commissions.
For some buyers, adjusting to this new normal may be confusing or even complicated, but that’s why Bonner highlights the importance of fully understanding the terms of any agreement before committing to an agent.
“I would encourage buyers to be crystal clear on the agreements they are signing before hiring an agent. Know exactly what the agent is agreeing to do for you and ensure that any concerns you have are addressed. These agreements are negotiable – whether they are for 30 days or 3 months, or the scope, from a single property address to an entire zip code. It’s important the agreements are regional-specific, time-specific, and tailored to your unique needs as a buyer,” says Bonner.
Sellers Need to Prepare for Increased Inventory
Though sellers will also need to adjust to a new normal following the NAR settlement, their greater challenge will be around managing expectations.
“As the market continues to grow with inventory, buyer demand is not going to look like it did two or three years ago, so it’s going to require some patience from sellers,” says Bonner. “Sellers are going to have to think about not just the list price, but in light of the NAR settlement, the buyer’s cost of acquisition. In order to successfully transact, sellers might have to be prepared to receive offers where the buyer is requesting closing cost credits, concessions, and/or outright compensation of their realtor.”
According to the latest data from NAR, the national months of inventory increased by 21.9% year-over-year, rising from 3.2 months in July 2023 to 3.9 months in July 2024. In regions with healthier levels of supply, where buyers have more options and greater power to negotiate, sellers may need to be more flexible.
Though the country is still undersupplied in many markets, conditions are improving. “There’s been a slight reaction in the market as the NAR settlement rules go into effect, but as agents and consumers adjust over the coming months, I think we could see an increase in inventory heading into the new year.”
Many markets have already seen inventory build ahead of the fall market. Notably, Denver, Austin, and Tampa have seen active listings increase by over 50% from last year, while active listings in Dallas, Phoenix, and Charlotte are up year-over-year by over 45%.
Some Pent-Up Demand to Be Unlocked After Election and Rate Cuts
As an election year, consumer confidence in the housing market could fluctuate leading up to November, with uncertainty potentially causing buyers and sellers to hesitate. However, there’s an expectation that consumers will feel a greater sense of stability post-election, potentially encouraging renewed activity in the market. And with rate cuts on the horizon, this could further boost positive sentiment for buyers.
“With the combination of rates potentially lowering, and getting past the certainty that comes with consumers post-election, I think we will see some pent-up demand unlocked and some transitions of existing homeowners entering the market closing out the year,” says Bonner.
As of the week of September 12, average 30-year mortgage rates are at their lowest since February 2023, with all signs pointing to a continued downward trend. Cooling mortgage rates could encourage buyers sitting on the sidelines to come back to the market, especially as average mortgage payments have increased at a faster rate than income in the past five years.
However, some sellers may need greater incentives to list their properties. “I think a lot of homeowners currently have tons of equity and are also sitting on very low interest rates. So unless the motive to move is very significant, there's no reason to act until conditions are more favorable,” adds Bonner.
According to a recent report from CoreLogic, the average U.S. homeowner gained roughly $25,000 in equity during the past year, while homeowners with mortgages saw their equity increase by a total of $1.3 trillion from the second quarter of 2023 to the second quarter of 2024. While this is good news for current homeowners, rising home values could be a barrier to would-be buyers.
It’s More Important than Ever for First-Time Home Buyers to Choose the Right Agent
“For a first-time homebuyer, the most important step is securing an agent who represents your interests. Relying on the seller’s agent creates divided loyalty, whereas having the right agent at your side ensures you get the guidance needed to make informed decisions at every stage of the process," recommends Bonner.
First-time homebuyers should also consider costs beyond just the initial purchase, especially as housing affordability tightens. According to a recent report from Bankrate, from 2020 to 2024, the average annual cost of owning and maintaining a home - including property taxes, insurance, and other expenses - increased nationally by 26%. In more affordable states like Kentucky, where the average annual cost of homeownership is $11,559, these hidden costs may be more manageable than in more expensive states like California, where the average annual cost of homeownership is nearly $17,000.
“With the rising cost of home acquisition, it's crucial for buyers to consider all the expenses beyond the purchase price. Factoring in closing costs, pre-closing expenses like inspections and appraisals, and preparing for life after the sale—such as ongoing maintenance—can make all the difference in long-term financial planning," says Bonner.
On top of rising maintenance costs, first-time homebuyers also have to grapple with rising prices. Among 223 metropolitan statistical areas, 29 experienced double-digit percentage gains for single-family median home prices from Q2 2023 to Q2 2024, according to NAR. The average rate of increase was 5.2% - a modest, yet steady rise that continues to strain affordability for first-time buyers.
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