What Will Happen to The Housing Market in 2024?  

Uncertainty was the name of the game for 2023, and that’s setting up the housing market for 2024. Looking at the data for the end of the year and where experts think real estate market activity is going, here’s what could happen in housing this year. 

What happened in 2023

To recap, January 2023 started strong in nationwide real estate sales. Looking at existing home sales data from the National Association of Realtors (NAR), the US had four million homes for sale at a median price of $362,000. 

The market was riding the post-pandemic wave then, but most experts believed the tide would turn during 2023. A recessionary economy was anticipated as questions circulated about inflation. General predictions called for home sales to slow down and price growth to level off. The projections called for year-end price growth between 4-5%. As a result of this market softening, the anticipation was that mortgage rates would decline slightly but not near their 3% low. 

As the year progressed, home prices grew, peaking at $410,000 in June 2023 before sliding back month-over-month. By October 2023, the sales prices were 3.4% more than the prior year at the same time. Meanwhile, closed sales peaked at 4.55 million in February and have declined ever since. October’s report had the YTD inventory of existing homes down 14.6%.

Inventory has been challenging all year but was at its lowest in February and March, at 970,000 homes. It increased to 1.15 million by October, achieving a 3.6-month supply of homes. The monthly supply grew only because affordability challenges are shrinking the available buyers. Inventory is down 5.7% YTD. 

As for mortgage rates, they hit new multi-decade highs in October 2023, with rates averaging over 8%. They have softened slightly since then but are still above 7%. 

The Setup for 2024 Real Estate

Given the currently known data, the new year will start with sustained low inventory levels. For yet a fourth year running, sellers have the upper hand. 

 But that doesn’t mean the picture is all dollars for home sellers. There may be fewer homes on the market, but the Housing Affordability Index (HAI) shows that owning a home is now at multi-year lows nationwide. The median household income isn’t enough to buy a median-priced house in the US. Stressed affordability, brought on by the pandemic price rises and higher mortgage rates has shrunk the buyer pool.

In a survey from Knightvest, 74% of respondents reported that their timeline to consider purchasing a home has lengthened as mortgage rates have increased so dramatically. Over three-quarters of those respondents have pushed back their buying plans by a year or more.

As the market transitions into the new year, more sellers are adjusting prices just to get more buyers in the door. The monthly supply of homes is growing because it’s taking longer to sell the active inventory. 

The continued high mortgage rates are dissuading more homeowners from listing and buying another home. It’s creating a cycle that appears to have no end.

But real estate is cyclical, so some factor will give eventually. People have to move for a job, family, or economic reasons. More Millennials and Gen-X are moving into home-buying positions, while baby boomers are facing retirement decisions. It’s going to cause a shift in real estate activity.

Will mortgage rates give?

CNET mortgage rate data pulled December 22, 2023, reported the 30-year fixed-rate interest rate at 7.06%, down 7.66% from the month’s start. Rates are still hovering near the multi-decade highs even if they have backed away from the 8% mark. 

The mortgage market isn’t directly dependent on what the Federal Reserve does to fight inflation, but there is some correlation. The Fed held its base rate at its final December 2023 meeting and signaled it may make some lower adjustments in 2024. But industry experts say buyers shouldn’t anticipate dramatic changes to interest rates.

“I don’t foresee rates getting much higher or causing dramatic home price declines. Well-priced homes, especially fixer-uppers, should still sell if they offer good fundamental value,” said Jeremy Resmer, CEO of Myrtle Beach Home Buyers.

Real estate industry economists and experts feel mortgage rates may soften further as the year progresses but are unlikely to drop below 5%. 

Will home prices appreciate?

The dynamic largely depends on where in the nation you live, as some markets report more demand. This demand for homes will put pressure on housing prices.

“Specific southeastern metro areas I’d keep an eye on are Nashville, Raleigh, Charleston, and Atlanta,” said Resmer. “Their economies are thriving and attracting new residents at a rapid clip. I expect strong sales activity and moderate home price appreciation to continue in those areas next year as demand remains resilient.”

Nonetheless, dramatic year-over-year and month-to-month pricing growth is less likely throughout 2024. Anticipate 3-4% price appreciation nationwide. 

Will housing sales slow?

Existing home sales activity is already low, but it’s likely to stay that way without more homes for sale. That could change if mortgage rates drop further, as home buyers are waiting to pounce on more affordable rates. Sales activity wouldn’t increase dramatically, but it could turn the corner. 

One market Resmer feels is worth watching is Florida, citing its hurricane risk and recent insurance woes. “Sales activity may slow more dramatically there if buyers find fewer affordable insurance options for coastal properties. But the allure of Florida will still attract many buyers willing to stomach the added costs.”

The 2024 Real Estate Market Projection

Piecing it all together, the real estate market will likely benefit from slowly declining mortgage rates. It won’t be a dramatic movement, but it may help make home buying more affordable for more people. That would stimulate some movement in the markets. Still, it will take larger moves to bring more homes to market. Home prices will keep appreciating for in-demand markets across the southeast.