Rising prices and steep borrowing costs in the US housing market kept homebuyers in a year-long limbo, with a national property shortage adding to headwinds in the sector.
While home prices dropped sharply through 2022, they rallied for nine-straight months beginning in January, recently hitting fresh all-time highs. Meanwhile, as the Federal Reserve raised borrowing costs, mortgage rates jumped to levels not seen sine the mid-2000s.
Finally though, conditions appear poised to shift, especially given mounting bets that the Fed will loosen monetary policy in 2024.
From supply to price growth, here are top experts’ outlooks for 2024 housing market.
Realtor.com: A “bit of a break”
As the Fed turns dovish, the 30-year fixed mortgage rate will average 6.8% next year, Realtor.com predicted in early December. In the last week of the month, the rate slid to 6.61%.
This could have the effect of slowing demand as homebuyers feel less pressure to race against higher borrowing costs. The listing agency expects prices to dip by 1.7%, having risen 3% in 2023.
“It will be a bit of a break after what have been pretty relentless home price increases,” Chief Economist Danielle Hale said, adding: “Some of the pressure and sense of urgency will start to let up.”
However, the volume of existing homes for sale will tumble 14%, as the mortgage rates at the level the firm predicts will still be more expensive than what 85% of current borrowers are paying.
Goldman Sachs: Inventory picks up
Goldman Sachs estimates existing sales will only dip slightly in 2024, before rebounding to 4.24 million the year after. Meanwhile, new home sales will climb from this year’s 680,000 to 723,000 in 2024.
That’s as housing starts will inch higher, climbing from 1.39 million to 1.335 million in 2024. New home construction has substantially increased this year, as homebuilders jumped on the lack of housing.
The bank expects muted price growth next year.
Redfin: Prices will fall 1%
The 30-year mortgage rate will average 6.6% by the end of 2024, leading to a 1% drop in home prices, the real estate firm expects.
“Home prices will still be out of reach for many Americans, but any break in the affordability crisis is a welcome development nonetheless,” Chief Economist Daryl Fairweather said.
Meanwhile, home sales will jump 5%, reaching 4.3 million. Still, Redfin says high costs will push rent demand higher, while there could be an uptick in priced-out Americans moving in with their parents.
Zillow: Prices will flatten
Buyers shouldn’t expect home prices to fall much, but the rate of growth will level off and allow Americans’ incomes to catch up, the real estate platform predicted in a late-November note.
Mortgage rates will probably hold at current levels in the coming months, as the persistent slowdown in inflation makes an uptick in rates unlikely.
“Taken together, the cost of buying a home looks to be on track to level off next year, with the possibility of costs falling if mortgage rates do,” Zillow researchers said.
Fannie Mae: Price growth will lose steam
Mortgage rates will average 6.7% in 2024, not far off levels seen this summer, the government-sponsored mortgage finance agency predicted.
Total home sales will jump to 4.8 million, fueled by a gradual recovery in existing home sales, Fannie Mae said. A modest economic downturn will cause a shallow decline in new home sales, though the contraction won’t diminish construction volumes in the long run.
The agency expects prices to continue appreciating, albeit at a slower pace. Citing an October survey, it forecasts 2.4% price growth next year.