5 Housing Market Predictions for 2024 You Should Know
The housing market is one of the most important and influential sectors of the economy, affecting millions of people's lives, wealth, and well-being. The housing market is also constantly changing and evolving, responding to various factors such as supply and demand, interest rates, income, demographics, and consumer preferences. Therefore, it is crucial to stay informed and prepared for the current and future trends and conditions of the market, whether you are a buyer, seller, renter, or investor.
In this article, we will share five housing market predictions for 2024 that you should know, based on the latest data, research, and forecasts from various sources, such as Zillow, Realtor.com, Fannie Mae, and the National Association of Realtors. These predictions will cover the following topics:
• Home prices
• Mortgage rates
• Home sales
• Home inventory
• Home affordability
Let's dive in and see what the housing market has in store for us in 2024:
1. Home prices will continue to rise but at a slower pace
One of the most notable trends of the housing market in the past few years has been the rapid and steady increase in home prices, driven by the low supply of homes for sale and the high demand from buyers, such as in Sammamish WA homes for sale. According to Zillow, the median home value in the U.S. was $303,000 as of November 2023, reflecting a 5.5% increase from a year earlier. However, the pace of home price appreciation is expected to slow down in 2024, as the supply and demand balance improves and the market cools off. Zillow predicts that the median home value will grow by 0.2% in 2024, reaching $303,600 by the end of the year. Realtor.com has a similar forecast, expecting the median home price to increase by 0.7% in 2024, reaching $354,000 by the end of the yearhttps://www.realtor.com/research/2024-national-housing-forecast/. Fannie Mae and the National Association of Realtors are more optimistic, projecting a 2.8% and a 4.1% growth in home prices, respectively, in 2024.
2. Mortgage rates will decline slightly, but remain above 6%
Another key factor that affects the housing market is the mortgage interest rate, which determines the cost and affordability of borrowing money to buy a home. The mortgage rate has been on the rise in 2023, reaching a two-decade high of 7.8% for a 30-year fixed-rate mortgage in November 2023. The main reason for the increase in mortgage rates has been the high inflation rate, which has prompted the Federal Reserve to tighten its monetary policy and raise its benchmark interest rate. However, the inflation rate is expected to moderate in 2024, as the economy recovers from the impact of the COVID-19 pandemic and the supply chain disruptions. This could lead to a slight decline in mortgage rates, as the Fed eases its policy stance and the bond market stabilizes. Zillow forecasts that the average 30-year fixed mortgage rate will drop to 6.8% by the end of 2024. Realtor.com expects a similar trend, predicting that the mortgage rate will average 6.8% in 2024 and reach a low of 6.5% by the end of the year. Fannie Mae and the MBA have more conservative estimates, projecting that the mortgage rate will average 7.1% and 6.6%, respectively, in 2024.
3. Home sales will rebound, but remain below pre-pandemic levels
The number of homes sold in the U.S. is another indicator of the health and activity of the housing market. The home sales volume has been affected by various factors, such as the availability and affordability of homes, consumer confidence and income, and the pandemic-related restrictions and preferences. According to the National Association of Realtors, the existing home sales volume was 5.99 million units in October 2023, down 5.9% from a year earlier. The home sales volume is expected to rebound in 2024, as the market conditions improve and the buyer demand recovers. Zillow predicts that the existing home sales volume will increase by 3.4% in 2024, reaching 6.19 million units by the end of the year. Realtor.com expects a similar growth rate, forecasting that the existing home sales volume will rise by 3.3% in 2024, reaching 6.18 million units by the end of the year. Fannie Mae and the National Association of Realtors are more bullish, projecting a 5.5% and a 6.3% increase in home sales, respectively, in 2024. However, even with the expected rebound, the home sales volume will likely remain below the pre-pandemic levels, which were around 6.5 million units in 2019 and 2020.
4. Home inventory will increase, but remain below normal levels
The number of homes available for sale in Washington luxury real estate is another measure of the supply and demand balance in the housing market. The home inventory has been at historically low levels in the past few years, as the home construction activity has lagged behind the population and household growth, and as the existing homeowners have been reluctant to sell their homes due to various reasons, such as the low mortgage rates, the high home prices, and the pandemic-related concerns. According to Zillow, the inventory of homes for sale was 1.04 million units in October 2023, down 12.1% from a year earlier. The home inventory is expected to increase in 2024, as the home construction activity picks up and the existing homeowners list their homes for sale in greater numbers. Zillow forecasts that the inventory of homes for sale will grow by 13.5% in 2024, reaching 1.18 million units by the end of the year. Realtor.com expects a similar trend, predicting that the inventory of homes for sale will rise by 13.6% in 2024, reaching 1.19 million units by the end of the year. Fannie Mae and the National Association of Realtors are more optimistic, projecting a 16.7% and a 20.8% increase in home inventory, respectively, in 2024. However, even with the expected increase, the home inventory will likely remain below the normal levels, which are around 2.5 million units, according to Zillow.
5. Home affordability will improve slightly, but remain a challenge for many buyers
The affordability of homes in the U.S. is a function of the home prices, the mortgage rates, and the income and savings of the buyers. The affordability of homes has been a major challenge for many buyers in the past few years, as the home prices have risen faster than the income and savings, and as the mortgage rates have increased in 2023. According to the Housing Affordability Index, which measures the ability of a median-income family to afford a median-priced home, the affordability of homes was 57.9% in October 2023, down from 63.3% a year earlier. The affordability of homes is expected to improve slightly in 2024, as the home prices slow down, mortgage rates decline, and income and savings grow. Zillow estimates that the affordability of homes will increase by 0.9 percentage points in 2024, reaching 58.8% by the end of the year. Realtor.com expects a similar improvement, forecasting that the affordability of homes will rise by 0.8 percentage points in 2024, reaching 58.7% by the end of the year. Fannie Mae and the National Association of Realtors are more pessimistic, projecting that the affordability of homes will decrease by 0.3 and 0.9 percentage points, respectively, in 2024. However, even with a slight improvement, the affordability of homes will likely remain a challenge for many buyers, especially in high-cost and high-demand markets, such as Seattle.
The housing market is one of the most important and influential sectors of the economy, affecting millions of people's lives, wealth, and well-being. The housing market is also constantly changing and evolving, responding to various factors such as supply and demand, interest rates, income, demographics, and consumer preferences. Therefore, it is crucial to stay informed and prepared for the current and future trends and conditions of the market, whether you are a buyer, seller, renter, or investor.