US Real Estate Agents Facing Rent Struggles, Impacting Housing Market Outlook for 2024

This year has seen homeowners opting to stay put while prospective buyers grapple with soaring housing costs, leading to a historically tight housing market with notably low sales figures. For professionals dependent on the real estate market, the landscape remains challenging.

A monthly Alignable report revealed that 45% of real estate agents owning their firms struggled to pay office rent in November, marking a continued increase from previous months. Corey Burr, Senior Vice President at TTR Sotheby’s International Realty, attributes this to recent interest rate hikes, causing a stagnation in home sales.

Having experienced the highs and lows of the real estate industry for over 36 years, Burr highlights the challenges faced by smaller brokerages, emphasizing their vulnerability in navigating market fluctuations compared to larger firms. The sluggishness in home sales has led to reduced income for agents, with pending home sales hitting record lows in October, even surpassing figures seen during the 2008 financial crisis.

The real estate workforce is expected to shrink as the market contracts, with over 60,000 agents leaving the industry in the six months leading up to May. Despite recent decreases in mortgage rates, they have yet to reach levels enticing enough for homeowners who previously secured lower rates to consider selling their homes, thereby maintaining inventory scarcity.

While the period between November and January typically experiences slower activity, Burr anticipates a potential uptick in the spring if mortgage rates continue to decline. Speculations about the Fed reaching the end of its tightening cycle and potentially introducing rate cuts in 2024 offer a glimmer of hope, possibly leading to further reductions in mortgage rates and aiding the strained housing market.

Looking ahead, experts foresee a potential decrease in mortgage rates in the coming year, with predictions by NAR’s chief economist Lawrence Yun indicating rates hovering between 6% to 7% by the following spring, potentially contributing to a 13.5% increase in home sales in 2024.