2024 is nearly upon us, and realtor.com® has published their forecast for what the year has in store for real estate professionals. Is the new year the same as the old year?
Not quite, the forecast states. 2024 will not be a massive turnaround from 2023, but there will be positive movement on home affordability due to decreases in mortgage rates (the forecast predicts 6.5% by year’s end) and home prices (a 1.7% drop). In 2024, the projected monthly purchase cost for a median-price home is $2,200 (35% of typical household income) compared to 2023’s $2,240 (37% of typical household income).
However, mortgage rates will likely continue to constrain the market in other ways; homeowners who bought at low rates during the pandemic boom will likely stay put to keep paying those rates rather than a higher mortgage at a new home. This will pull down inventory (the forecast projects a 14% drop year-over-year).
The forecast notes, though, that should rates drop faster than anticipated, that could incentivize sellers to enter the market. As the forecast notes, inflation—and to what extent it declines—will be the deciding factor in where mortgage rates land.
Absent a steep decline in mortgage rates, new construction is likely to be where most housing stock comes from (a 0.4% year-over-year increase in single-family home starts is projected) and a competitor for sellers. Home sales are projected to remain mostly static year-over-year (a 0.1% increase).
The forecast also stresses that the rental market will continue to be an important factor; supply outpacing demand suggests rent prices will drop slightly (0.2%), adding to the bend toward affordability.
The report also lists the 100 largest U.S. metropolitan areas alongside projected price and sales growth during 2024. Some examples:
New York/Newark metropolitan area
-10.8% sales growth, 3% price growth
Austin, Texas, metropolitan area
-11.7% sales growth, -12.2% price growth
Atlanta metropolitan area
-15.8% sales growth, 0.4% price growth
Miami metropolitan area
3.8% sales growth, 5% price growth
Los Angeles metropolitan area
9.2% sales growth, 3.8% price growth
Expert takeaway
“Our 2024 housing forecast reveals the green shoots we’ve been waiting to see in the housing market and should give buyers some optimism after a grueling few years. Although mortgage rates are expected to ease throughout the course of the year, the continuation of high costs will mean that existing homeowners will continue to have a high threshold for deciding to move, but we will start to see some interest,” said Danielle Hale, chief economist for realtor.com®. “Moves of necessity—for job changes, family situation changes and downsizing to a more affordable market—are likely to drive home sales in 2024. Homebuyers will continue to seek out markets where they feel like they get the most out of their dollar as they look for homes that better meet their needs.”
Read the full forecast here.
