Lower mortgage rates will contribute to an affordability rebound in 2024, according to the 2024 Housing Forecast from Realtor.com. Inventory will remain tight, though, with Realtor.com projecting a 14% year-over-year decline in existing-home supply.
After peaking near 8% in the latter months of 2023, Realtor.com forecasts mortgage rates will average 6.8% in 2024, with rates edging down toward 6.5% by the end of the next calendar year. While these rates will be lower than those seen in recent months, the decline will not be enough to entice homeowners with lower rates to list their homes, according to Realtor.com.
“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,” says Realtor.com chief economist Danielle Hale. “Although mortgage rates are expected to ease throughout the course of the year, the continuation of high costs will mean the existing homeowners will continue to have a high threshold for deciding to move, but we will start to see some interest.”
Home prices are projected to drop by 1.7% in 2024, with rents also falling by 0.2% in the next calendar year. Realtor.com projects home sales will remain essentially flat in the coming year, increasing 0.1% to 4.07 million.
“Moves of necessity—for job changes, family situation changes, and downsizing to a more affordable market—are likely to drive home sales in 2024,” Hale says. “Home buyers 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.”
In 2024, Realtor.com projects the typical monthly purchase cost for the median-priced home listing will be less than $2,200, or about 35% of the typical household income. This would represent an improvement from 2023, when monthly payments required 37% of monthly income.
In a continuation of a trend that developed in 2023, existing-home sellers should expect to continue to compete with new construction. The lack of resale supply in 2023 has contributed to new homes representing nearly one-third of the market. Realtor.com projects single-family housing starts will increase by 0.4% in 2024, providing additional competition for a resale market that will continue to have limited inventory.
Next year, an increase in new rentals will also help push the vacancy rate closer to the 7.2% average seen from 2013 to 2019, according to Realtor.com. The surge in rental options will provide renters with more options to choose from, but the “sheer number” of renters will minimize the potential price impact.
Realtor.com highlighted several geopolitical issues (including the war in Ukraine and the conflict between Israel and Palestine) as well as inflation and the 2024 domestic election season as factors that could impact the housing market in the coming year.
In addition to its national projections, Realtor.com’s 2024 Housing Forecast includes sales and price growth projections for the 100 largest metros. Sales growth is projected to increase the most in Oxnard-Thousand Oaks-Ventura, California (+18%); Toledo, Ohio (+14%); Riverside, California (+13.8%); and Bakersfield, California (+13.4%), with sales projected to decline the most in Portland-Vancouver, Oregon-Washington (-25.6%); Charlotte-Concord, North Carolina-South Carolina (-22.4%); and Baton Rouge, Louisiana (-20.4%). Prices are projected to appreciate the most in Detroit-Warren-Dearborn, Michigan (+10.9%) and Rochester, New York (+10.4%), while prices are projected to decrease to most in Austin-Round Rock, Texas (-12.2%) and Spokane-Spokane Valley, Washington (-10.2%).
