Housing Market Forecast 2024: 4 Expert Predictions

If you've been keeping a close eye on the real estate market, you'll be pleased to hear that some good news is on the horizon for homebuyers. After a tumultuous period, the housing market is expected to stabilize in 2024. While challenges such as high mortgage rates and limited inventory continue to persist, experts believe that conditions for both buyers and sellers will not deteriorate any further. In fact, the upcoming year is poised to be a turning point in the world of real estate, with a potential rebound in home sales, lower mortgage rates, and an increase in home listings.

While these improvements will be gradual, it's essential to acknowledge that housing affordability will remain a top concern for homebuyers. Danielle Hale, Chief Economist at Realtor.com, highlights this as the most significant issue. However, the prospect of slightly lower mortgage rates and home prices offers a glimmer of hope, making homeownership more accessible.

Let's delve into the expert predictions for the 2024 housing market:

1. Mortgage Rates Will Decrease

Mortgage rates posed a significant challenge for homebuyers in 2023, reaching two-decade highs, with rates even touching 8% at one point. However, there has been a recent decline in rates. Factors such as a slowing economy, a weakening labor market, and progress in tackling inflation prompted the Federal Reserve to maintain the federal funds rate and hint at possible rate cuts in 2024.

Consequently, 10-year Treasury yields and the corresponding mortgage rates have fallen. Experts unanimously agree that this downward trend in rates will continue into the new year, though not necessarily into the 3% or 4% range. Predictions vary, with Zillow suggesting rates to stay between 7% and 7.5%, the National Association of Realtors anticipating rates to average below 7% by spring and end the year around 6.3%, and Realtor.com forecasting an average of 6.5% for 2024. With rates already trending below 7% at the end of December, there's optimism for rates to remain below that threshold throughout the year.

2. Inventory Will Increase

The limited inventory of homes in 2023 was largely due to sellers' reluctance to list their homes, fearing the loss of the low mortgage rates they had locked in. Fortunately, 2024 should bring an improvement in the number of homes available for sale. Overall, inventory may increase by up to 30% compared to the previous year, with some markets experiencing even faster growth.

Homeowners who purchased their properties when rates were in the 5% and 6% range have adjusted their expectations regarding rate fluctuations. This means they are now less sensitive to the rate-lock effect, making them more willing to list their homes for sale.

3. Home Prices Will Likely Stay Flat

While there will be improvements in housing supply and mortgage rates, the dynamics that have maintained high home prices will persist. The demand still outstrips supply, as inventory remains significantly below pre-pandemic levels. This competitive landscape is expected to keep upward pressure on home prices.

On a national level, experts predict that home prices will remain flat or potentially decrease by about 1% in 2024. However, this doesn't rule out the possibility of certain markets experiencing more substantial price declines, similar to cities like San Francisco and Las Vegas. Nevertheless, these declines are unlikely to jeopardize the housing market as a whole.

4. Home Sales Will Increase

With improving overall market conditions, most housing analysts anticipate an increase in home sales in 2024. However, there are varying opinions on the extent of this improvement. Realtor.com provides the most conservative estimate, forecasting a modest year-over-year increase of 0.1% in existing home sales, equating to approximately 4 million homes sold. On the other end of the spectrum, the National Association of Realtors (NAR) predicts a robust 13.5% increase compared to 2023.

The common thread in these forecasts is the hope that declining mortgage rates will attract more buyers to the market and potentially encourage sellers to list their homes.

2024 is expected to bring some relief to the housing market, with lower mortgage rates, increased inventory, relatively stable home prices, and improved home sales. While challenges remain, the outlook for the year suggests a more balanced and favorable real estate landscape. Buyers and sellers alike can look forward to a market that is gradually becoming more accommodating.

Source: https://money.com/housing-market-forecast-2024/