Despite affordability challenges buyers will find slowing home price growth, lower mortgage rates and more choices as life events force homeowners off the sidelines
NORTH BETHESDA, Md., Nov. 29, 2023 /PRNewswire/ — Despite slower home price growth, affordability will be the biggest challenge for homebuyers in 2024, according to the Bright MLS 2024 Housing Forecast released today. However, more buyers and sellers will return to the market in the coming year as interest rates fall from 22-year highs, and homeowners begin to loosen their grip on 3% mortgage rates as life events prompt more people to move. The result will be more options for home shoppers and a rise in home sales, though market activity is still projected to remain well below typical levels.
Based on the Bright MLS forecast, buyers and sellers in 2024 can expect:
Bright MLS Housing Forecast: 2024 Will Be Better for Buyers
A new normal for mortgage rates that fall below 7% in the first quarter and range between 6-6.5% before reaching 6.2% at year-end.
Existing home sales to end the year at 4.6 million, up 12.1% from the record low numbers in 2023, but still below the number of home sales in a typical year.
Changing family and financial circumstances to prompt more sellers off the sidelines, which will lead to a 7.6% increase in inventory at the end of 2024.
More inventory and more buyers will keep home prices stable, with the median home price in the U.S. rising just 1.5% to $394,200.
Growing affordability challenges and an increase in the supply of new homes will send home prices lower in some markets, largely concentrated in California and Florida.
“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. “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.”
Key 2024 housing trends and the wildcards
A slower start to the spring homebuying season – Although home sales are expected to increase in 2024, Bright MLS’ forecast calls for home sales to remain low in the first quarter of the year, as rates remain around 7% and some prospective buyers will wait, holding out for lower rates later in the year.
“Life happens” will force homeowners out of their sub-3% loans – With nearly two-thirds of U.S. homeowners holding onto a mortgage rate below 4% and rates currently well above 7%, there has been little incentive to sell. However, as rates begin to fall and move closer to 6.5%, homeowners who have been characterized as being “locked in” to their mortgage will increasingly find that changing family and financial circumstances outweigh their low rates. This will lead to more new listings over the course of the year. Inventory will still be below pre-pandemic levels, though the gap will have narrowed so that nationally year-end 2024 inventory will be at 92% of the year-end 2019 level.
Affordability will continue to challenge buyers – Several factors will push and pull at home prices in 2024. More inventory will be generally offset by more buyers in the market. This will keep home prices stable in many markets. But affordability, which worsened significantly over the past year as both mortgage rates and home prices were rising, is going to continue to be a challenge in 2024, particularly for first-time homebuyers. Sellers looking to attract these buyers may need to offer closing cost assistance or other financial incentives to make the numbers work for those in the market for the first time.
Buyers waiting for a major price correction should not hold their breath – There is no evidence to suggest that there will be major, widespread home price corrections in 2024. However, in markets where home prices escalated during the pandemic or where new single-family construction is adding significantly to inventory, buyers could see home prices fall below 2023 levels. Conversely, markets where home prices have been rising in line with wages and inventory remains low, prices will continue to rise in 2024 (see the lists of markets with the largest forecasted increases and decreases below).
Wildcards that could shake up the housing market – The housing market has been anything but predictable in recent years, and there is a risk that political or economic factors could bring the unexpected to the housing market in 2024. Right now, the outlook is for a mild and short recession in 2024, which will not have a major impact on the housing market. However, ongoing global conflicts could increase the U.S. recession risk. Government standoffs and political discord at home can also lead to more consumer anxiety.
Bright MLS 2024 National Housing Metrics & Historical Data
|
2024 Bright MLS Forecast |
2023 Bright MLS Year-end Expectation |
2022 Historical Data |
2021 Historical Data |
|
|
Mortgage Rates |
6.5% (avg). 6.2% (year-end) |
6.8% (avg.) 7.5% (year-end) |
5.3%% |
3.0 % |
|
Existing Home Sales |
4.6 million (+12.1% from 2023) |
4.1 million |
5.2 million |
6.1 million |
|
Median Sales Price |
$394,200 (+1.5% from 2023) |
$388,350 |
$384,000 |
$350,700 |
|
Existing Home For-Sale Inventory (end of the year) |
1.3 million (+7.6% from 2023) |
1.2 million |
960,000 |
880,000 |
Metros With 2023-2024 Price Declines
|
Market |
2024 Forecasted Median Home Price |
|
Greater than 5% Price Decline |
|
|
Miami, Fla. |
$563,300 |
|
San Diego, Calif. |
$919,800 |
|
Las Vegas, Nv. |
$435,300 |
|
Riverside, Calif. |
$533,900 |
|
Los Angeles, Calif |
$848,200 |
|
Between a 1 and 5% Price Decline |
|
|
Boston, Mass. |
$711,600 |
|
Tampa, Fla. |
$398,400 |
|
Nashville, Tenn. |
$399,100 |
|
Austin, Texas |
$476,000 |
|
Orlando, Fla. |
$432,100 |
Metros With 5% or More Price Increases in 2024
|
Market |
2024 Forecasted Median Home Price |
|
Indianapolis, Indiana. |
$332,200 |
|
Buffalo, N.Y. |
$273,600 |
|
New Orleans, La. |
$295,600 |
|
Chicago, Ill. |
$383,400 |
|
St. Louis, Mo. |
$284,700 |
|
Birmingham, Al. |
$330,400 |
|
Cleveland, Ohio |
$252,100 |
|
Louisville, Ky. |
$289,600 |
|
Pittsburgh, Pa. |
$247,300 |
|
Detroit, Mich. |
$285,300 |
To view Bright’s full 2024 housing forecast, please visit: brightmls.com/research
Methodology: Bright’s forecast is based on analysis of historic data from the National Association of Realtors and Freddie Mac, and takes into account economic and demographic factors that will drive housing demand and supply in 2024.
About Bright MLSBright MLS was founded in 2016 as a collaboration between 43 visionary associations and two of the nation’s most prominent MLSs to transform what an MLS is and what it does, so real estate pros and the people they serve can thrive today and into our data-driven future through an open, clear and competitive housing market for all. Bright is proud to be the source of truth for comprehensive real estate data in the Mid-Atlantic, with market intelligence currently covering six states (Delaware, Maryland, New Jersey, Pennsylvania, Virginia, West Virginia) and the District of Columbia. Bright MLS’s innovative tool library—both created and curated—provides services and award-winning support to well over 100K real estate professionals, enabling their delivery on the promise of home to over half a million home buyers and sellers monthly. Learn more at BrightMLS.com.
SOURCE Bright MLS
