The 10 Hottest US Real Estate Markets Poised for a Surge in Home Sales in 2024
After two years of sluggish activity, the US housing market is bracing for a dramatic turnaround. The National Association of Realtors (NAR) predicts a significant rebound in home sales in 2024, fueled by falling mortgage rates that will lure buyers back into the market. This resurgence is expected to create windfalls for realtors and drive home price gains, with 10 metropolitan areas identified as having the most pent-up demand.
The NAR’s forecast paints a picture of renewed optimism for the housing sector. US home sales are projected to plummet by approximately 18% in 2023, marking the most significant drop in at least 15 years. Fewer than four million houses are expected to change hands this year, a level not seen since 2010, just before the recovery from the financial crisis. This slowdown has been largely attributed to soaring mortgage rates, with the rate on a 30-year fixed mortgage peaking near 7.8% in late October as interest rates skyrocketed.
Despite the plunge in sales, home prices have remained stubbornly high, a testament to the persistent housing shortage. With limited inventory, even weaker demand hasn’t led to a meaningful decrease in sale values, adding further strain to financially stressed buyers. However, the outlook for 2024 offers a glimmer of hope.
The Turning Point: Falling Mortgage Rates and Renewed Demand
The primary catalyst for the anticipated rebound is the projected decline in mortgage rates. The NAR forecasts that the average rate on a 30-year fixed mortgage will drop to 6.3% in 2024, a marked improvement from current levels. This decrease is expected to be driven by Federal Reserve interest rate cuts, with the firm projecting four such cuts starting in the spring.
“The decline in mortgage rates is expected to draw more buyers, including those returning to the market, consequently bolstering demand for housing,” the NAR report states. “These lower mortgage rates will also ease the rate lock-in effect by enticing more existing homeowners to re-enter the market and list their homes.”
This easing of affordability constraints is anticipated to breathe new life into the housing market. The NAR predicts that new home sales will surge by 19%, while existing property sales are expected to grow by 13%. These increases will translate into significant windfalls for realtors, who will benefit from the increased transaction volume. Furthermore, sellers are also poised to enjoy home price gains as demand outpaces supply.
The 10 Markets Primed for a Boom
To identify the areas set to reap the rewards of this market turnaround, the NAR compiled a list of 10 metropolitan areas with the most significant pent-up demand. These “sleeping giants” are expected to witness an explosion in home transactions after a period of dormancy. The NAR’s analysis considered 10 factors across the 100 largest US markets, including Q3 2023 home price growth, the percentage of renters who can afford to buy a median-priced home, and the share of potential buyers who would re-enter the market if mortgage rates fell to 6.5%. Other considerations included job growth, income growth, and crime rates.
Here are the 10 markets identified as the hottest for home sales in 2024:
Austin, Texas
2023 Home Price Growth: -7.7%
Share of Renters Who Can Afford a Median-Priced Home: 18.9%
Share of Returning Buyers if Mortgage Rates Fall: 5.1%
Austin boasts one of the largest pools of potential “returning\” buyers. If interest rates decline to 6.5% in 2024, an estimated 5.1% of all households in the Austin metro area will regain the ability to afford the median-priced home. Despite ongoing housing cost challenges, the city is experiencing an influx of high-earning Millennials (over $100,000) relocating from other states. While Austin’s housing market is sensitive to changes, the combination of this demographic shift and the pool of returning buyers is expected to fuel substantial growth. According to the Austin Board of Realtors, home sales activity has already shown a positive turnaround, signaling the start of this resurgence.
Dallas, Texas
2023 Home Price Growth: 1.9%
Share of Renters Who Can Afford a Median-Priced Home: 21.5%
Share of Returning Buyers if Mortgage Rates Fall: 4.9%
Among the 100 largest metro areas, Dallas stands out with the second-fastest-growing job market. The local economy has generated over 4% more jobs compared to the previous year, creating a robust environment for potential homebuyers. With 22% of renters already able to afford the median-priced home, a further decrease in mortgage rates in 2024 is expected to significantly boost housing activity. The combination of strong economic growth and improving affordability positions Dallas as a key beneficiary of the national market rebound.
Dayton, Ohio
2023 Home Price Growth: 9.1%
Share of Renters Who Can Afford a Median-Priced Home: 30.6%
Share of Returning Buyers if Mortgage Rates Fall: 4.7%
Dayton offers a compelling combination of affordability and ample options for first-time buyers. More than half of the listings in this market are accessible to first-time homebuyers, a rarity in today’s market. Furthermore, the area’s strong job market is expected to enable more renters to make the transition to homeownership in the coming year. Dayton’s relative affordability and economic stability make it an attractive destination for those seeking value in the housing market.
Durham/Chapel Hill, North Carolina
2023 Home Price Growth: 2.6%
Share of Renters Who Can Afford a Median-Priced Home: 18.8%
Share of Returning Buyers if Mortgage Rates Fall: 5.6%
The Research Triangle area, encompassing Durham and Chapel Hill, is poised for significant growth. This metro area leads with the highest share of potential \”returning\” buyers, accounting for 6% of households that could regain homeownership affordability if mortgage rates fall. While the region faces a shortage of affordable listings for first-time buyers, wage growth has been substantial, with average earnings increasing by 13 percentage points over the past year. This wage growth, coupled with the influx of returning buyers, is expected to drive increased housing market activity.
Harrisburg, Pennsylvania
2023 Home Price Growth: 8.5%
Share of Renters Who Can Afford a Median-Priced Home: 32.1%
Share of Returning Buyers if Mortgage Rates Fall: 5.3%
Harrisburg is not only already affordable for over 30% of its renters but is also attracting high-earning renters from other states. As mortgage rates are anticipated to decline in 2024, both inventory and buying activity are expected to grow further. This increase will be fueled by existing homeowners selling their properties, with a notable 42% of homeowners having already surpassed the area’s average tenure of 15 years. These long-time owners are prime candidates to re-enter the market, adding much-needed supply.
Houston, Texas
2023 Home Price Growth: 3.7%
Share of Renters Who Can Afford a Median-Priced Home: 23.8%
Share of Returning Buyers if Mortgage Rates Fall: 4.3%
Rounding out the Texas Triangle on this list, Houston’s affordability and strong job and wage growth are expected to propel market activity in 2024. Housing affordability for renters in Houston surpasses that of most markets across the country. A noteworthy aspect of the Houston market is the fourfold increase in wages, outpacing the national level. This robust economic growth, combined with existing affordability, positions Houston for a strong rebound in home sales.
Nashville, Tennessee
2023 Home Price Growth: 0.7%
Share of Renters Who Can Afford a Median-Priced Home: 13.8%
Share of Returning Buyers if Mortgage Rates Fall: 4.6%
The anticipated resurgence of \”returning\” buyers will also drive market growth in Nashville. The city’s strong job market continues to attract many Millennial renters earning over $100,000. However, Nashville faces a significant housing shortage of listings at price points affordable to first-time buyers. Despite this inventory challenge, the influx of returning buyers and high-earning professionals is expected to create a dynamic market in 2024.
Philadelphia, Pennsylvania
2023 Home Price Growth: 4.6%
Share of Renters Who Can Afford a Median-Priced Home: 21.5%
Share of Returning Buyers if Mortgage Rates Fall: 4.7%
Philadelphia is set to experience a significant boost driven by pent-up demand from both buyers and sellers, as the rate lock-in effect begins to ease next year.
