The Hottest Real Estate Markets in the US as Home Sales Surge in 2024, According to the National Association of Realtors
The housing market is on the verge of a significant turnaround after two stagnant years, according to the National Association of Realtors (NAR). US home sales are projected to rebound strongly in 2024, driven by falling mortgage rates that will entice buyers back to the market. This resurgence in activity is expected to create windfalls for realtors, boost home prices, and benefit metropolitan areas with pent-up demand.
In 2023, the US housing market experienced its most significant downturn in at least 15 years, with home sales plummeting by approximately 18%. Fewer than four million houses changed hands, marking the lowest volume since 2010, just before the recovery from the financial crisis. This slump was primarily caused by historically high mortgage rates, with the 30-year fixed mortgage peaking near 7.8% in late October. Despite the weak demand, home prices remained stubbornly high due to a severe shortage of housing inventory, exacerbating affordability challenges for prospective buyers.
However, the outlook for 2024 offers a ray of hope. The NAR projects that the Federal Reserve will cut interest rates four times in 2024, starting in the spring, bringing the average 30-year fixed mortgage rate down to 6.3%. While this rate is still elevated compared to historical averages, it represents a marked improvement that will make homeownership more attainable for many Americans. The anticipated decline in mortgage rates is expected to draw more buyers back to the market, including those who have been sidelined by high rates. Furthermore, lower rates will ease the “rate lock-in” effect, encouraging existing homeowners to list their properties and increasing overall inventory.
The NAR forecasts a 19% increase in new home sales and a 13% rise in existing home sales in 2024. This surge in activity is projected to benefit realtors through increased commissions and transactions. Home sellers can also expect home prices to rise as demand outpaces supply.
To identify the areas most poised to benefit from this market rebound, the NAR compiled a list of 10 metropolitan areas with the highest levels of pent-up demand. These cities, described as “sleeping giants,” are expected to experience explosive growth in home transactions after a prolonged period of dormancy. The selection process involved analyzing 10 factors across the 100 largest US markets, including year-over-year home price growth in Q3 2023, the percentage of renters who can afford a median-priced home, the projected share of returning buyers if mortgage rates fall to 6.5%, job growth rates, income growth, and crime rates.
Here are the 10 US real estate markets projected to experience the strongest surge in activity in 2024:
Austin, Texas
Austin has long been a magnet for tech talent and young professionals, but recent years have seen a significant cooling of its once-feverish housing market. In 2023, Austin experienced a -7.7% decline in home prices, reflecting a correction from the unsustainable gains of the pandemic era. However, the city boasts one of the largest pools of “returning\” buyers, with 5.1% of households expected to re-enter the market if mortgage rates drop to 6.5%. Despite the current affordability challenges, with only 18.9% of renters able to afford a median-priced home, the influx of high-earning Millennials, many earning over $100,000, from other states continues to fuel demand. This demographic shift, combined with the return of sidelined buyers, is anticipated to drive significant growth in the local housing market. Home sales activity has already shown positive signs of a turnaround, according to the Austin Board of Realtors.
Dallas, Texas
Dallas stands out as one of the fastest-growing job markets in the nation, with an impressive 4% increase in jobs compared to the previous year. This robust economic expansion has created ample opportunities for residents, with 22% of renters in the market able to afford a median-priced home. The combination of strong job growth and relative affordability positions Dallas for a significant surge in housing activity as mortgage rates decline in 2024. The city’s appeal to both first-time buyers and investors makes it a prime candidate for a housing market boom.
Dayton, Ohio
Dayton offers a compelling value proposition for homebuyers seeking affordability and accessibility. With a remarkable 30.6% of renters able to afford a median-priced home, Dayton is one of the most budget-friendly markets on the list. First-time buyers will find particular appeal here, as they can afford more than half of the listings available in the market. The city’s strong job market further bolsters its attractiveness, enabling more renters to transition to homeownership. Dayton’s combination of affordability and economic opportunity makes it a standout market for 2024.
Durham/Chapel Hill, North Carolina
The Research Triangle region, known for its vibrant innovation ecosystem, is poised for a significant housing market resurgence. Durham/Chapel Hill leads the nation with the highest share of \”returning\” buyers, accounting for 6% of households that can once again afford to purchase a home. While the area faces a shortage of listings affordable to first-time buyers, wage growth has been exceptional, with average earnings rising by 13% from the previous year. This income growth, coupled with the return of sidelined buyers, is expected to drive substantial activity in the Durham/Chapel Hill market.
Harrisburg, Pennsylvania
Harrisburg combines affordability with a growing influx of high-earning renters from other states, creating a potent cocktail for housing market growth. With over 30% of renters able to afford a median-priced home, the market is already accessible to a broad segment of the population. The anticipated decline in mortgage rates is expected to further boost both inventory and buying activity as existing homeowners, many of whom have surpassed the average tenure of 15 years, decide to list their properties. This combination of affordability and returning sellers positions Harrisburg as a prime market for 2024.
Houston, Texas
The third Texas city to make the list, Houston, offers a compelling blend of affordability, strong job growth, and rising wages. Housing affordability for renters in Houston surpasses that of most markets across the country, with 23.8% of renters able to afford a median-priced home. Perhaps even more impressive is the fourfold increase in wages in Houston compared to the national level, significantly outpacing the country’s average wage growth. This economic dynamism, combined with a substantial pool of \”returning\” buyers (4.3%), is expected to drive significant activity in the Houston housing market.
Nashville, Tennessee
Nashville, known for its vibrant music scene and burgeoning tech sector, is set to experience a surge in housing activity driven by the return of sidelined buyers. The anticipated resurgence of these buyers, coupled with a strong job market that attracts high-earning Millennials, will fuel demand. However, the market faces a significant challenge in the form of a severe housing shortage, particularly in the price range affordable to first-time buyers. Despite this constraint, the influx of new buyers is expected to create a dynamic market environment in 2024.
Philadelphia, Pennsylvania
Philadelphia is poised for a significant boost driven by pent-up demand from both buyers and sellers as the rate lock-in effect begins to ease. A substantial 44% of homeowners in the market have exceeded the average tenure of 17 years, indicating a large pool of potential sellers ready to list their properties once rates become more favorable. For first-time buyers, Philadelphia offers twice as many affordable purchase options compared to most other markets across the country. This combination of returning sellers and accessible inventory positions Philadelphia as a strong candidate for housing market growth in 2024.
Portland, Maine
Portland has emerged as a magnet for high-earning Millennials, attracting the second-highest concentration of these professionals among the 100 largest metro areas, following San Jose. The city boasts the lowest violent crime rate on the list, further enhancing its appeal. However, Portland faces a significant affordability challenge, with fewer than 10% of listings within reach for first-time buyers. Nevertheless, with approximately 42% of homeowners having exceeded the average tenure, there is considerable potential for an increase in inventory as these \”rate lock-in\” sellers decide to list their homes. This supply response could be a game-changer for the Portland market.
Washington, DC; Arlington/Alexandria, Virginia
The Washington, DC metropolitan area, encompassing Arlington and Alexandria, Virginia, is expected to see a significant boost in housing market activity. While the region is recognized for its high teleworking population, the proportion of remote workers witnessed a substantial decline of 21 percentage points in 2022. This expected return to the office is anticipated to drive increased demand in the market as more people commute to work. One in five listings in this area falls within the budget range for first-time buyers, and with 15.8% of renters able to afford a median-priced home, the market is well-positioned for growth. The return of sidelined buyers, projected at 4.8%, will further fuel this expansion.
The National Association of Realtors’ analysis highlights that the combination of falling mortgage rates, pent-up demand, and improving affordability will reshape the US housing landscape in 2024. While challenges remain, particularly in the form of housing supply shortages in some markets, the overall outlook is positive. For buyers, the prospect of more favorable rates and increased inventory offers
