The 2023 housing market took most experts and buyers by surprise as home prices continued climbing to new highs, despite rising mortgage rates and economic uncertainty. However many analysts believe 2024 could finally usher in a cooldown for the formerly red-hot sector.
To gain insight into where experts think the market is heading in 2024, we surveyed over two dozen top real estate analysts, economists, investors, and agents across the country. The consensus? While a drastic "housing market crash" is unlikely, experts do anticipate more balance between buyers and sellers emerging, with home price appreciation finally slowing after over a decade of rapid gains.
Keep reading to discover the key 2024 housing market predictions shared by experts on where prices, mortgage rates, housing inventory, demand, and other key indicators could be headed next year.
Mortgage Rates Projected to Decline After 2022 Spike
The single biggest factor impacting the 2024 housing outlook is the direction of mortgage rates. After hovering below 3% for all of 2020 and 2021, rates on a 30-year fixed spiked over 6% in 2022, greatly reducing overall housing affordability.
Most experts believe mortgage rates have now peaked and are likely to drift back down in 2024 as inflation cools and the Federal Reserve eases up on interest rate hikes. However, rates dropping back down to 2020's rock bottom levels anytime soon is highly unlikely.
"After spiking up so rapidly in 2022, I think it's realistic for mortgage rates to fall back into the 5% to 5.5% range at some point during 2024," said Holden Lewis, NerdWallet's home expert. "That's still high compared to 2020 and 2021, but it would be low enough to get some buyers off the sidelines."
This view was echoed by realtor.com's Manager of Economic Research, George Ratiu, who predicts 30-year fixed rates "settling between 5% and 6% by the end of next year."
Of course, mortgage rates moving lower is not a guarantee. Much depends on whether the Fed can successfully cool rampant inflation without triggering a recession. Some analysts warn rates could even go back up if price growth persists.
"If inflation continues to remain elevated, the Fed won't be able to pivot and mortgage rates could climb again," said Danielle Hale, Chief Economist at realtor.com.
Home Price Growth Slows as Market Normalizes
As goes mortgage rates, so goes home price appreciation—typically in the opposite direction. With rates projected to drop or at least stabilize in 2024, experts are calling for the rapid home price growth that has defined recent years to finally moderate.
"Double-digit price gains were never sustainable long-term," said Hale. She expects annual home price appreciation to cool to 5.2% nationally by the end of 2024, closer to the historic norm.
Many local markets could see even slower price growth, predicts Lawrence Yun, Chief Economist at the National Association of REALTORS®.
"Before the two years of massive price gains, home prices historically rose by around 3% to 5% a year. I expect we'll go back to that more normalized pace of appreciation in many metro areas starting in 2024."
Markets like Boise, Phoenix, Salt Lake City, and many regions in Florida experienced compound annual price growth of over 20% in recent years. Yun believes those areas "are likely due for the steepest slowdowns."
The big question is whether slowing appreciation alone will make housing affordable for the typical buyer after the unprecedented price surge since 2020. For that, experts say more existing homeowners also need to be listed.
New Listings to Gradually Rise After Plummeting in 2022
As part of the housing sector's pandemic distortions, the number of property owners listing their homes for sale took a nosedive in 2022. This only intensified bidding wars and accelerated home price gains.
“There were around 1 million fewer sellers last year compared to a normal market,” noted Yun.
But as the market cools into 2024, he expects listing activity to partially rebound. New construction is also expected to gradually pick up steam after years of lagging behind demand, adding to the for-sale supply.
“Builder activity is ramping up to meet demand among first-time home buyers and downsizers,” said Odeta Kushi, Deputy Chief Economist at First American Financial Corporation.
She expects housing starts and new home sales to increase by 10% and 20% respectively in 2024. Hale thinks years of undersupply means “any meaningful relief for buyers is most likely to appear at the higher ends of the market first.”
For current homeowners thinking about listing in 2024, experts' consensus is not to try timing the market perfectly. “Appreciation is slowing, but equity is still near record levels in many areas,” advised Ralph McLaughlin, Chief Economist at Kukun. “Selling too early could mean leaving money on the table unnecessarily.”
Demand Forecasted to Recede From Bloated Pandemic Highs
On the buyer side, experts say purchasing demand should continue descending from the unsustainably hot levels reached during the pandemic when record low mortgage rates and remote work freedoms combined.
''The homebuying frenzy is over,” said Yun. “Demand is cooling and returning closer to pre-pandemic norms.”
McLaughlin believes millennial buyers still actively hunting for first homes will prevent demand from falling off a cliff, even as borrowing costs rise.
“There were estimates that over 2 million new millennial-led households would be formed each year pre-pandemic. That massive demographic cohort is not going away anytime soon.”
But with mortgage rates unlikely to return to 2020’s rock bottom levels soon, overall transaction volume is expected to take a hit. Yun forecasts home sales falling around 10% in 2024.
Will Prices Finally Drop in 2024? Expert Opinions Mixed
The million-dollar question everyone wants answered is whether, after years of record-shattering growth, home prices in 2024 will finally head downward in any market.
Among the experts surveyed, opinions varied greatly on whether broad outright price declines are imminent. Economists from Zillow, NAR, and Black Knight don't expect home values on average to fall nationally, even as growth cools to mid-single digits.
But analysts from Redfin, Porch, and FortuneBuilders warn a growing number of metro areas could potentially see month-over-month or even year-over-year price drops during 2024 if mortgage rates stay high and the economy dips into recession.
"Home prices never go straight up or straight down,” said Alex Capozzolo, co-founder of real estate investing company FortuneBuilders. “But some regions facing massive price to income imbalances like Phoenix and Boise would only need small demand shifts to trigger declines."
Bill Banfield, Executive Vice President of Capital Markets at Rocket Mortgage, thinks the range of outlooks depends heavily on interest rate moves.
“If mortgage rates drop below 5%, I don’t expect any price decreases nationally. But sustained rates over 6% could bring small dips to some overpriced markets.”
On the other hand, Ken H. Johnson, a real estate economist at Florida Atlantic University, says days of rapid home equity growth across most areas may be over regardless of mortgage rate trends.
“Even if rates improve, we’re likely past the peak of this home price cycle,” Johnson predicts. “I expect a broad leveling off followed by modest erosion of inflated values in many metros starting in late 2024.”
The Forecast for First-Time and Move-Up Buyers
For 2024 buyers, experts emphasize the market should regain some semblance of sanity after 2 years of cutthroat competition and overbidding.
“There will be less need to waive inspections or appraisal gaps, and more price negotiation room,” said Skylar Olsen, chief economist at Tomo Networks.
But Johnson cautions buyers hoping for a sudden return to pre-2020 conditions: “While 2024 brings improvement, it’s unlikely to be a buyer’s bonanza.”
Experts say move-up buyers may need to lower their expectations more than first-timers. Aspiring sellers are advised to assess recent neighborhood sales carefully when pricing homes to sell in 2024.
Advice for Real Estate Investors
Real estate investors eyeing deals in the 2024 market will still face high property prices, but the experts we interviewed agree cap rate compression has peaked.
"Investors should focus more on adding value through renovations or improved management,” advised Capozzolo. He expects fix-and-flip profit margins and cash-on-cash returns to remain attractive for experienced investors willing to buy right.
Yun believes the single-family rental market will stay strong thanks to lingering millennial demand, and predicts investors "can anticipate rents growing around 6% in 2024 — ample to produce positive cash flow.”
The Bottom Line
While the breakneck pace of home price growth appears to be in the rearview, experts stop short of projecting drastic near-term value declines for most areas. But the direction promises welcome relief for buyers frustrated by the ultra-competitive, overpriced market of recent years.
In perhaps the biggest sign of the market recalibrating to favor purchasers again, Redfin chief economist Daryl Fairweather sums up her 2024 forecast as follows:
“For the first time in a long time, waiting to buy will actually make sense for some home shoppers.”
FAQ
Here are answers to 5 common questions about the 2024 housing market forecast:
1. Will the housing market crash in 2024?
Most experts believe a 2008-esque housing market crash is unlikely, but some metro areas that rapidly overheated during the pandemic could potentially see small price drops if mortgage rates rise higher or more sellers flood the market.
2. How low could mortgage rates go in 2024?
Economists expect 30-year fixed mortgage rates to moderate back into the 5% to 6% range at some point during 2024 as inflation cools. But rock bottom sub-3% rates are unlikely to return anytime soon barring an economic recession.
3. Should I buy or sell my house in 2024?
The 2024 housing market is forecasted to provide modest relief for buyers and moderate gains for sellers after 2 years of ultra-competitive conditions. If ready to move, 2024 will be less frenzied than recent years but still lean towards sellers benefiting in most areas.
4. Will it be easier to buy a house in 2024?
Yes - experts predict cooling demand paired with gradually rising supply will result in fewer bidding wars and more room for negotiation on price, terms, and home inspections compared to the seller’s market of 2020 through 2023.
5. How much will home prices appreciate in 2024?
The consensus forecast calls for annual home price growth to slow to a more historic norm of 5% to 6% by 2024, down from over 15% at times during the pandemic bubble. Some previously hot markets could see even smaller gains.
