How's the market doing? What's going to happen in 2024? What about interest rates? Do you think they'll start coming down? When's a good time to sell?
These are some of the questions you routinely field from friends, family, neighbors, and clients trying to understand the market to make smart real estate decisions.
The National Association of REALTORS® recent report, Markets with the Most Pent-Up Housing Demand, gives you some insight to share about what’s happening.
Finally, the real estate news for 2024 is brighter than it has been. The market is expected to grow in 2024, and NAR anticipates 4.71 million existing-home sales in 2024, a rise of 13.5% from the 4.1 million expected home sales in 2023.
Falling interest rates and inflation
In addition, inflation and interest rates may start moving down as soon as the first quarter of 2024.
The Federal Reserve finally paused its interest rate hikes, leading to a decline in rates after hitting a peak of 7.8% in the last week of October. The lower rates could tempt existing homeowners, locked into appealing low-interest rates, to consider selling—a change that would bring more inventory to the market.
Lower mortgage rates, higher demand
Though interest rates still may feel high for homebuyers, keep in mind that every 0.2% decrease allows approximately 950,000 households to step into the market to buy, which will boost housing demand.
Still, even when the housing supply increases, NAR expects inventory to remain tight, possibly fueling home price appreciation. The median home price will reach $389,500, an increase of 0.9% from 2023.
Affordability factors
When rates are near 6.6%, the average American family can afford to purchase the median-priced home without spending more than 30% of their income. NAR forecasts that the 30-year fixed-rate mortgage could hit that milestone sometime in the second half of 2024. If rates do reach that level, nearly 4.5 million households could afford the median-priced house in 2024.
The report also looked at the ten markets with the greatest pent-up demand, which NAR expects to outperform other cities in 2024. They are:
- Austin-Round Rock-Georgetown, TX
- Dallas-Fort Worth-Arlington, TX
- Dayton-Kettering, OH
- Durham-Chapel Hill, NC
- Harrisburg-Carlisle, PA
- Houston-The Woodlands-Sugar Land, TX
- Nashville-Davidson–Murfreesboro–Franklin, TN
- Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
- Portland-South Portland, ME
- Washington-Arlington-Alexandria, DC-VA-MD-WV
See the complete report here.
Also listen to NAR chief economist Lawrence Yun’s comments during the Real Estate Forecast Summit: The Year Ahead, here.
