Lower mortgage rates and easing prices are set to usher in the beginning of an affordability turnaround in 2024, as per the Realtor.com® 2024 Housing Forecast. While buyers can anticipate lower prices (-1.7%) and average mortgage rates of 6.8%, the challenge lies in the decreased inventory (-14%) as existing homeowners, content with low mortgage rates and pandemic-era homes, opt to stay put.
Key Projections for 2024
- Average Mortgage Rates: Mortgage rates are expected to average 6.8%, gradually decreasing to 6.5% by the end of the year.
- Home Prices: A slight easing with a drop of 1.7% is forecasted after a general increase since 2012.
- Rent Trends: Rents are expected to drop by 0.2%, making renting a more budget-friendly option in most markets.
- Inventory Decline: A significant -14% year-over-year drop in inventory is anticipated as homeowners with low mortgage rates choose not to sell.
- Steady Home Sales: Home sales are projected to hold steady, rising 0.1% year over year to reach 4.07 million.
Insights from Chief Economist
“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,” said Danielle Hale, Chief Economist for Realtor.com®.
2023 Housing Trends and Wildcards
Affordability Turnaround: Affordability is set to officially turn around in 2024. The typical monthly purchase cost for the median-priced home listing is expected to be slightly less than $2,200/month, about 35% of the typical household income.
Builder and Rental Market Dynamics: Despite builders catching up, the lack of excess capacity in housing remains. Shiny new rental construction will hit the market, impacting rental vacancy rates and potentially affecting sellers.
Geopolitics and Inflation: Geopolitical events, including conflicts in Ukraine and the Middle East, along with domestic factors like the 2024 election season and inflation, could influence the housing market unpredictably.
Tools for Buyers and Sellers
Buyers and sellers entering the market in 2024 are advised to use Realtor.com®’s tools. For buyers, the Buying Power tool categorizes homes as “affordable,” “stretching,” or “difficult” based on lending criteria. Sellers can utilize RealValue™ tools to understand their proceeds from a sale and assess the impact on mortgage payments with current interest rates.
Local Market Predictions
Realtor.com® provides predictions for the 100 largest U.S. metros. Here are some highlights (in alphabetical order):
- Akron, Ohio: Sales Growth – 3.2%, Price Growth – 3.2%
- Atlanta-Sandy Springs, Ga.: Sales Growth – (-15.8%), Price Growth – 0.4%
- Los Angeles-Long Beach, Calif.: Sales Growth – 9.2%, Price Growth – 3.5%
Realtor.com®’s 2024 Housing Forecast paints an optimistic picture for buyers with the promise of affordability improvements. While challenges like limited inventory persist, the market is expected to respond to moves of necessity and changes in housing dynamics. Buyers and sellers are encouraged to leverage Realtor.com®’s tools for informed decision-making in this evolving landscape.