While interest rates and scarce inventory will continue to pose challenges, the national housing market should manage to achieve both growth and improved affordability next year, with 10 areas in particular expected to see substantial growth, according to Realtor.com.
The online real estate marketplace predicts both mortgage rates and home prices should decline in 2024, offering welcome relief for lenders and aspiring homeowners. Separately But at the same time, they also predict housing supply will diminish even further, resulting in general market sluggishness.
The mixed messaging still led Realtor.com to predict that next year home sales across the country will hold steady compared to 2023 levels, edging up next year by 0.1% to approximately 4.07 million. The increase is likely to occur even with inventory expected to drop 14%, according to its 2024 housing forecast.
Researchers also see rates averaging 6.8% next year, eventually hitting 6.5% by the end of 2024, after they crossed and stayed above 7% for much of the second half of 2023. Median home prices should fall 1.7% on an annual basis, after rising every year since 2012.
"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," said Danielle Hale, chief economist at the home buying enterprise.
But factors leading to nationwide growth won't hit all parts of the country equally. In the 100 largest markets, sales are likely to remain depressed, falling 2.2% year over year. Prices in those markets will also buck the national trend, with an expected 1.2% average rise in median value.
"Existing homeowners will continue to have a high threshold for deciding to move, but we will start to see some interest," Hale noted. Primary drivers of home sales in 2024 are likely to be "moves of necessity" for changes in job or family situations or economic downsizing, she said.
The overall pullback in rates and values will drive slight improvement in affordability, with the typical monthly cost for a median priced home listing to come in at close to 35% of household income. In 2023, homeowners doled out 37% on average.
The markets expected to see the greatest growth next year are concentrated in California, the Midwest and Northeast. Communities in the Golden State are set to recover after a higher-than-average 2023 downturn. Meanwhile, buyers in Midwest and Northeast markets, which already had greater affordability, will keep those areas humming. But unanticipated changes in the outlook for rates or employment could drive all predictions off track, researchers said.
According to Realtor.com, here are the 10 markets poised to see the most growth next year, after factoring in both rising sales numbers and predicted home values.
