The 10 Hottest Real Estate Markets Poised for a Surge in 2024, According to the National Association of Realtors
The American housing landscape is on the cusp of a dramatic transformation. After a prolonged period of stagnation driven by soaring interest rates, a new forecast from the National Association of Realtors (NAR) signals a robust rebound for 2024. This anticipated surge in home sales, fueled by the prospect of falling mortgage rates, is set to revitalize markets across the country, creating a ripple effect of opportunity for buyers, sellers, and real estate professionals alike.
For much of 2023, the housing market grappled with an unprecedented affordability crisis. The benchmark 30-year fixed mortgage rate climbed to levels not seen in decades, peaking near 7.8% in late October. This steep ascent, driven by the Federal Reserve’s aggressive efforts to combat inflation, effectively priced out millions of prospective buyers. Consequently, the volume of home sales plummeted, with projections indicating an 18% decline for the year—the most significant contraction in at least 15 years. Fewer than four million homes were expected to change hands in 2023, a stark reminder of the market’s deep freeze.
The silver lining amidst this downturn was the surprising resilience of home prices. Despite the sharp drop in demand, sale values remained stubbornly elevated. This phenomenon, according to the NAR, can be attributed to a critical shortage of housing inventory. With a dearth of available properties, the intense competition for the few homes on the market kept prices afloat, exacerbating the financial strain on buyers who were already contending with high interest rates.
However, the outlook for 2024 presents a compelling narrative of recovery. The NAR projects a significant moderation in mortgage rates, with the average 30-year fixed rate expected to settle around 6.3% by next year. While this figure remains elevated compared to historical norms, it represents a substantial improvement from the recent peaks. This anticipated easing is predicated on the Federal Reserve’s projected series of four interest rate cuts, beginning in the spring of 2024.
“The decline in mortgage rates is expected to draw more buyers, including those returning to the market, consequently bolstering demand for housing,” the NAR researchers noted in their analysis. “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.”
The combination of improved affordability and a potential thaw in the rate lock-in effect—whereby existing homeowners are hesitant to sell and relinquish their low-interest mortgages—is expected to ignite a wave of activity. The NAR forecasts a 19% increase in new home sales and a 13% rise in existing property sales, translating into a more vibrant and dynamic market landscape.
Identifying the Epicenters of Growth: The NAR’s Top 10 Markets
To pinpoint the areas poised to benefit most from this anticipated resurgence, the National Association of Realtors has compiled a list of 10 metropolitan areas exhibiting the highest levels of pent-up demand. These “sleeping giants,” as the report terms them, are characterized by a confluence of favorable economic indicators and demographic trends that position them for explosive growth in the coming year.
The NAR’s methodology involved a comprehensive analysis of 10 distinct factors across the 100 largest U.S. markets. Key metrics included the year-over-year home price appreciation in the third quarter of 2023, the percentage of renters within each market who possess the financial capacity to purchase a median-priced home, and the projected influx of “returning” buyers if mortgage rates were to recede to 6.5% or lower. Additionally, the analysis factored in crucial economic indicators such as job growth rates, income growth trends, and local crime statistics to provide a holistic view of each market’s potential.
The result is a curated list of 10 metropolitan areas that are set to become the focal points of the 2024 housing market revival. Each market presents a unique combination of strengths, making them particularly attractive to a diverse range of buyers and investors.
Here are the 10 markets identified by the NAR as having the most significant pent-up demand:
Austin, Texas
Austin, long celebrated for its vibrant culture and burgeoning tech scene, stands out as a market with considerable pent-up demand. Despite experiencing a 7.7% decrease in home prices during 2023, a notable trend is emerging: a significant influx of high-earning Millennials relocating from other states. This demographic, many of whom command salaries exceeding $100,000, is drawn to Austin’s dynamic job market and lifestyle amenities.
While the city faces ongoing housing cost challenges, the combination of these new high-earner arrivals and “returning” buyers—those who were previously priced out but will regain affordability if rates fall to 6.5%—is expected to fuel substantial market activity. The Austin Board of Realtors has already observed a positive turnaround in home sales, signaling the beginning of this anticipated surge.
2023 Home Price Growth: -7.7%
Share of Renters Who Can Afford a Median-Priced Home: 18.9%
Share of Returning Buyers If Rates Fall: 5.1%
Dallas, Texas
The Dallas metropolitan area, the second-fastest-growing job market among the nation’s 100 largest, is primed for significant housing market expansion. The local economy demonstrated remarkable resilience, generating over 4% more jobs compared to the previous year. This robust economic expansion has created a fertile ground for housing demand.
With 22% of renters in Dallas possessing the financial wherewithal to purchase a median-priced home, the market is well-positioned to absorb the anticipated influx of buyers. As mortgage rates decline in 2024, this existing pool of qualified buyers, combined with the prospect of new entrants to the market, is expected to drive a substantial increase in housing activity.
2023 Home Price Growth: 1.9%
Share of Renters Who Can Afford a Median-Priced Home: 21.5%
Share of Returning Buyers If Rates Fall: 4.9%
Dayton, Ohio
Dayton, Ohio, represents a compelling case study in affordability and accessibility for first-time homebuyers. The market stands out for offering a wealth of affordable housing options, with buyers able to afford more than half of the available listings. This level of accessibility is a significant draw in a market where affordability has become an increasing concern.
Furthermore, Dayton’s robust job market is expected to facilitate a smooth transition to homeownership for a larger segment of renters. As the local economy continues to generate employment opportunities, more renters will possess the income stability and financial credentials required to enter the housing market, further fueling activity in 2024.
2023 Home Price Growth: 9.1%
Share of Renters Who Can Afford a Median-Priced Home: 30.6%
Share of Returning Buyers If Rates Fall: 4.7%
Durham/Chapel Hill, North Carolina
The Research Triangle region, encompassing Durham and Chapel Hill, has long been a magnet for talent and innovation. This metropolitan area leads the nation with the highest share of “returning” buyers, accounting for a remarkable 6% of households that will regain affordability if mortgage rates decline to 6.5% or lower.
While the Durham area faces a shortage of affordable listings for first-time buyers, this challenge is counterbalanced by tremendous wage growth. Average earnings in the region have surged by 13 percentage points from the previous year, significantly outpacing the national average. This rapid income appreciation is empowering more renters to compete for available properties, creating a dynamic and competitive market environment.
2023 Home Price Growth: 2.6%
Share of Renters Who Can Afford a Median-Priced Home: 18.8%
Share of Returning Buyers If Rates Fall: 5.6%
Harrisburg, Pennsylvania
Harrisburg, Pennsylvania, offers a compelling combination of affordability and economic dynamism. More than 30% of renters in this market can already afford to purchase a median-priced home, providing a solid foundation of existing demand. Adding to this dynamic is the city’s success in attracting high-earner renters from other states, drawn by its combination of affordability and quality of life.
As mortgage rates are anticipated to decline in 2024, both housing inventory and buying activity are expected to expand further. A notable factor contributing to this potential inventory growth is the high rate of homeownership tenure; 42% of homeowners in Harrisburg have already surpassed the average tenure of 15 years, suggesting that a significant segment of the market is ripe for turnover.
2023 Home Price Growth: 8.5%
Share of Renters Who Can Afford a Median-Priced Home: 32.1%
Share of Returning Buyers If Rates Fall: 5.3%
Houston, Texas
Houston, the third metropolitan area in Texas to make the list, is poised for a robust housing market rebound. The city’s appeal stems from a powerful combination of housing affordability, a strong job market, and significant wage growth. While housing affordability for renters in Houston surpasses that of most markets across the country, the most noteworthy trend is the four
