Housing market predictions for 2024

With home prices historically high and inventory still very tight, many prospective sellers and hopeful buyers are feeling nervous about today’s housing market.

The median sale price for an existing home in the U.S. was $382,600 as of December 2023, the sixth straight month of year-over-year price increases. And after rising above 8 percent in October, the average 30-year mortgage rate as of the end of January 2024 was 6.84 percent — still higher than most homeowners’ locked-in rates, but a welcome reprieve from the recent 20-year highs.

Home prices, mortgage rates, and inventory levels will all shape housing affordability in the coming year. Curious about where these trends may go? Read on to learn what the experts predict for the 2024 housing market.

Will housing sales decline?
While home prices more than held firm in 2023, the volume of home sales softened considerably. Existing-home sales declined for five months in a row before rising slightly in November 2023. However, they fell again in December to an annual pace of 3.78 million, according to NAR data, which represents a 6.2 percent drop year-over-year. However, these trends may pivot in 2024 if mortgage rates continue to dip.

“The housing market is off to a good start this year, as consumers benefit from falling mortgage rates,” said NAR chief economist Lawrence Yun in the association’s December pending home sales report. NAR forecasts that sales will rise by 13 percent in 2024.

“Housing sales are expected to increase a bit from this year,” agrees Chen Zhao, who leads the economics team at Redfin. “However,” she qualifies, “we are not expecting sales to increase dramatically, as rates are likely to remain above 6 percent.”

“Lower mortgage rates would help spur home sales activity, which are expected to increase in 2024 compared to 2023,” says Selma Hepp, chief economist at CoreLogic. “Declines in mortgage rates will drive more sellers to trade their existing home and help add much-needed inventory to the market, leading to more transactions.”

Will 2024 be a buyer’s or seller’s market?
In today’s market, tight inventory continues to give sellers the upper hand. There are more buyers than there are homes available, so each home that comes on the market becomes more of a hot commodity than it might if there were more options to choose from. Without a significant uptick in inventory, the seller’s market seems unlikely to change this year.

“The current significant shortage of inventory suggests it would be hard to [become] a buyer’s market anytime soon,” says Hepp.

“Given expectations about interest rates and supply, demand will probably exceed supply similar to current conditions,” Zhao says. “Supply is likely to remain below what we would deem a balanced market.”

The bottom line on the 2024 housing market
The combination of high mortgage rates, steep home prices, and low inventory levels are lining up to make the 2024 housing market a challenging one for both buyers and sellers. But rates have been cooling a bit — if that continues throughout the year, as some experts predict, then market activity should heat up in response.

The complexities of the current conditions mean that now more than ever, it’s smart to lean on the guidance of an experienced local real estate agent. If you want to enter the market in 2024, whether as a buyer or a seller, let a pro lead the way for you.