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Experts expect US housing market to change in 2024

Looking ahead to 2024, The National Association of Realtors says better days are ahead, helped by expectations the Fed will cut interest rates.
Experts expect US housing market to change in 2024
Posted at 1:03 PM, Dec 28, 2023
and last updated 2023-12-28 15:04:07-05

For Nicholas Cimino, looking for a house to buy in 2023 was fruitless.

"Literally nearly every day I'm on all the platforms. I'm constantly searching," said Cimino.

Cimino tells Scripps News Tampa Bay he spent eight months looking.

"A lot of people have come to Florida, Tampa Bay, in general — let alone homes have increased in price, interest rates have gone up, so trying to find a home where I'd like to be is just not out there from what I can see," he said. 

For the year, sales of new homes ticked up a bit, but the National Association of Realtors said existing homes were down 18% from 2022. 

"In 2024 we'll see how the market trend goes, but you just have to stay at it," Cimino said. 

Looking ahead to 2024, The National Association of Realtors says better days are ahead, helped by expectations of the Federal Reserve cutting interest rates.

If the economy evolves as projected, the median participant projects that the appropriate level of the federal funds rate will be 4.6% at the end of 2024, 3.6% at the end of 2025, and 2.9% at the end of 2026.

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The Realtors Association says mortgage rates have likely peaked and are now down from their high of nearly 8% in late October. 

Next year, the NAR says to look for 30-year fixed rate mortgages to average 6.3%.

At that rate, the buyer of a home bought at the median price, of around $387,000, would pay about $375 less each month compared to the high-water mortgage rate.

That lower percent is important because research shows when rates are near 6.6%, the average American family can afford a median-priced home without using more than 30% of their income to do so.

Still, there remains a record low inventory, and current homeowners don't want to sell and give up the mortgages they took out when rates were lower a few years ago.

The NAR identified these markets as the toughest to find a home in, based on supply and demand, led by the Austin, Texas, area.

Danielle Hale, chief economist, for Realtor.com, says that in addition to rates dipping, prices may also be a little easier to handle in 2024. 

"One thing I think is going to be a bright spot for buyers in 2024, many of whom are worn out from the lack of affordability, is that we actually do expect affordability to improve in 2024. We're not going to see a big turnaround, but we'll see a baby step in the right direction. We expect home prices are going to soften a little bit, not enough to wipe the existing equity existing homeowners have, but at least a little easier for homebuyers to get into the housing market, especially first-time homebuyers," said Hale.


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