Housing Market Forecast for 2024

The housing market keeps changing. It has seen a lot of ups and downs in recent years. The pandemic made the market crazy for a while. Now, things are uncertain again. People want to know what will happen in 2024.

Let us look closely at the housing market and analyze key trends. This will give you a good idea of what to expect next year. Do you want to buy your first home? Do you own a home already? Perhaps you want to understand the market. Whatever the case, this guide will help.

Experts expect the housing market to remain challenging in 2024. Buyers will likely still face high mortgage rates, steep asking prices, and low inventory. However, some experts do see signs of improvement on the horizon.

 

Where Mortgage Rates Could Go

Mortgage rates skyrocketed in 2022, topping 8% in October and November. This priced many buyers out of the market. In 2024, rates may finally start trending down. Retreating mortgage rates should bring more buyers and sellers to the market.

Greg McBride, Bankrate's chief financial analyst, warns that the new normal of higher rates will stay as long as the economy continues to motor along. However, not all economists agree that rates have peaked yet.

If inflation cools and the Federal Reserve eases up on rate hikes, mortgage rates could dip to 6% or lower by the end of 2024. That may not match the rock-bottom lows of 2020–2021. But it would offer buyers some relief.

Modest Home Price Growth Expected

Despite recent annual numbers, home prices show signs of slowing growth. Prices rose 16.9% year-over-year in September 2022, according to NAR. But that is down from 18.1% growth in August.

Some experts believe this deceleration will continue into 2024. They expect prices to rise slightly next year. Others echo predictions of mid-single-digit annual gains.

 

Inventory Constraints Continue

Buyers have struggled with low inventory throughout this housing cycle. Sadly, 2024 does not appear to bring any relief. The current significant inventory shortage makes it hard for the market to become buyer-friendly anytime soon.

The National Association of Realtors (NAR) predicts some improvements. They expect an increase in home construction and more existing homeowners to sell. This may be the case, even if it means giving up their low mortgage rates. However, the market would need to double its inventory to achieve balance.

In summary, 2024 will likely see only slight increases in inventory. A seller’s market will likely persist across much of the country.

Analysts caution that 2024 may look much like 2023 for hopeful home buyers. Mortgage rates could trend down from recent highs if the Fed tames inflation. But rates over 6% would still challenge affordability. Home prices should also keep rising, albeit at a more moderate yearly pace. And inventory will remain low compared to historical norms.

While the headwinds will not disappear overnight, the housing market could finally be past its peak pain point. Improvement may be gradual, but next year could bring some relief from the breakneck conditions of 2021–2022. Pay close attention to your local market's mortgage rates and inventory levels to gauge good times to buy.

For more on the housing market, visit Team Prehoden at our Encinitas, California, office. Call 858-217-5400 to schedule an appointment today.