Bright MLS released its National Housing Market Outlook on Wednesday, which shows that affordability will remain the biggest challenge for homebuyers next year.
Homebuyer traffic will increase in 2024, fueled by lower mortgage rates and more existing-home inventory. Home sales are expected to rise, as homebuyers will have more options to choose from. However, market activity is still projected to remain well below typical levels.
“After a very difficult market for buyers who have had to contend with an atypical housing market in 2023, home shoppers will find more listings to choose from in 2024,” Lisa Sturtevant, Bright MLS chief economist, said in a statement. “At the same time, both buyers and sellers will have to reset expectations next year for persistently higher mortgage rates and more negotiations during the transaction.”
Here’s what homebuyers and sellers can expect in 2024, according to Bright MLS:
- Mortgage rates will fall, ranging between 6% and 6.5% for much of the year before reaching 6.2% by the year’s end.
- Existing-home sales will end 2024 at 4.6 million, up 12% from 2023’s 4.1 million.
- Existing-home inventory will grow to 1.3 million homes by the end of 2024, up 7.6% from 1.2 million in 2023.
- The median home price in the U.S. will rise minimally by 1.5% to $394,200.
Home sales are poised to remain low during the first quarter of 2024, according to the report. As long as rates remain around 7%, some prospective homebuyers will wait for better opportunities. Existing-home sales are projected to climb to an annualized rate of 4.6 million in the new year, but that’s still below the typical sales rate of 5.2 million.
Home prices should remain stable in many markets as the uptick in inventory will be offset by more buyers jumping into the market.
“There is no evidence to suggest that there will be major, widespread home price corrections in 2024,” the report cautioned.
Housing markets in California and Florida are likely to see the most home-price declines in 2024, although no market seems poised for double-digit price drops next year.
Affordability will remain a challenge in 2024, especially for first-time homebuyers. As a result, sellers looking to sell quickly may need to offer financial incentives such as closing cost assistance to entice first-time homebuyers.
On the bright side, sellers, some of whom stayed handcuffed to their 2-3% mortgage rates, are expected to gradually go back on the market, as life events force them to.
Regional differences in home prices in 2024
Indianapolis, Buffalo, New York, and New Orleans will post a 5% or more home-price increase in 2024. Meanwhile, Miami, San Diego and Las Vegas will see home prices drop by 5% or more in 2024, Bright MLS predicts.
Bright MLS’ forecast relies on an analysis of historical data from the National Association of Realtors and Freddie Mac. It takes into account economic and demographic factors that will drive housing demand and supply in 2024.