While this area is recognized as having a high teleworking population, the proportion of remote workers witnessed a significant decline, plummeting by 21 percentage points in 2022. This decline in remote work is expected to drive increased demand in the market as people return to their offices. One in five listings falls within the budget range for first-time buyers.”
The Hottest US Housing Markets Set to Explode in 2024 as Sales Surge
Get ready for a seismic shift in the American housing landscape. After two brutally quiet years characterized by sky-high mortgage rates and frozen inventory, the National Association of Realtors (NAR) predicts a dramatic turnaround in 2024. Home sales are poised to rebound strongly, luring buyers back to the market in droves.
For prospective homeowners, 2024 promises a much-needed reprieve. The suffocating grip of mortgage rates nearing 8% will loosen significantly, with forecasts predicting a drop to an average of 6.3%. This substantial improvement, driven by anticipated Federal Reserve interest rate cuts, will unlock pent-up demand that has been simmering beneath the surface.
The NAR’s analysis reveals that US home sales are on track to plummet around 18% in 2023, marking the largest decline in at least 15 years. Fewer than four million homes will change hands for the first time since 2010, a stark reminder of the post-financial crisis recovery period. This slowdown wasn’t due to falling prices, however. Instead, a persistent shortage of inventory kept values elevated, compounding the affordability crisis for stressed buyers.
But 2024 is shaping up to be a game-changer. Lower mortgage rates are expected to reignite activity across the entire housing ecosystem. The NAR projects a 19% surge in new home sales and a 13% increase in existing property sales. This resurgence will create a bonanza for realtors and bring much-needed relief to sellers, who can anticipate healthy home price appreciation.
10 Markets Poised for Explosive Growth
To identify where this pent-up demand will manifest most dramatically, the NAR pinpointed 10 metropolitan areas with the strongest underlying fundamentals. These “sleeping giants” are on the verge of a transaction boom after a prolonged dormancy.
The selection process involved analyzing 10 key factors across the 100 largest US markets. Critical metrics included home price growth in the third quarter of 2023, the percentage of renters who can currently afford a median-priced home, and the projected increase in buyer participation if mortgage rates fall to 6.5% or lower. Additionally, the NAR considered job growth, income growth, and crime rates to paint a comprehensive picture of each market’s potential.
Here are the 10 metropolitan areas set to reap the rewards of the 2024 housing market rebound:
Austin, Texas
Despite experiencing a -7.7% dip in home prices during 2023, Austin’s underlying fundamentals remain exceptionally strong. A remarkable 18.9% of renters in this vibrant market can currently afford a median-priced home, and a significant 5.1% of households are projected to re-enter the market if rates drop to 6.5%.
What’s particularly compelling about Austin is the ongoing influx of high-earning Millennials. Many individuals earning over $100,000 are relocating from other states, attracted by the city’s dynamic economy and lifestyle. While prices have been volatile, this sustained demand from affluent renters is expected to fuel a robust housing market resurgence. In fact, the Austin Board of Realtors has already observed a positive turnaround in home sales activity.
Dallas, Texas
Dallas stands out with the second-fastest-growing job market among the 100 largest metros, having expanded its employment base by over 4% year-over-year. With 22% of renters in Dallas able to afford a median-priced home, the stage is set for increased activity as mortgage rates decline. The projected return of 4.9% of buyers if rates fall further solidifies Dallas’s position as a prime growth market.
Dayton, Ohio
Dayton offers a compelling combination of affordability and accessibility for first-time buyers. A substantial 30.6% of renters in this market can comfortably afford the median-priced home, and buyers can purchase more than half of the available listings. The area’s strong job market will further enable renters to transition into homeownership in 2024, with a projected 4.7% of buyers returning to the market.
Durham/Chapel Hill, North Carolina
The famed Research Triangle is well-represented on this list. Durham/Chapel Hill boasts the highest share of “returning” buyers, with 6% of households gaining affordability if rates drop to 6.5%. While the area faces a shortage of entry-level housing, the combination of rapid wage growth (up 13% year-over-year) and the strong influx of returning buyers points to significant pent-up demand. A notable 18.8% of renters can already afford a median-priced home, and a projected 5.6% more will join the ranks if rates fall.
Harrisburg, Pennsylvania
Harrisburg presents an attractive profile with 32.1% of its renters currently able to afford a median-priced home. This affordability is attracting high-earning renters from out of state, further bolstering demand. As mortgage rates decline, both inventory and buying activity are expected to surge. A significant 42% of homeowners in Harrisburg have already surpassed the average tenure of 15 years, indicating a substantial pool of potential sellers ready to list their properties once rates become more favorable. The market anticipates a 5.3% return of buyers.
Houston, Texas
The third Texas metro area to make the cut, Houston’s combination of affordability, robust job growth, and rising wages positions it for a strong 2024. While housing affordability for renters in Houston already surpasses that of most markets, the noteworthy factor is the fourfold increase in wages, outpacing the national average. This economic dynamism, coupled with the potential return of 4.3% of buyers if rates drop, will drive significant market activity.
Nashville, Tennessee
Nashville is poised for a resurgence driven by returning buyers, with a projected 4.6% increase in market participation if rates fall. A strong job market continues to attract high-earning Millennials to the city. However, Nashville faces a significant challenge in the form of a severe housing shortage for first-time buyers, with fewer than 13.8% of renters currently able to afford a median-priced home. This supply constraint could temper the extent of the 2024 rebound.
Philadelphia, Pennsylvania
Philadelphia is set for a dynamic 2024 as pent-up demand from both buyers and sellers begins to release. A substantial 44% of homeowners in this market have exceeded the average tenure of 17 years, creating a large pool of potential sellers once the rate lock-in effect subsides. For first-time buyers, the market offers twice the number of affordable purchase options compared to most areas across the country. Affordability is strong, with 21.5% of renters able to buy a median-priced home, and a projected 4.7% of buyers expected to return.
Portland, Maine
Portland has emerged as a magnet for high-earning Millennial renters, second only to San Jose. The city also boasts the lowest violent crime rate among the 100 largest metro areas, making it an exceptionally attractive place to live. However, affordability remains a significant hurdle, with fewer than 10% of listings within reach for first-time buyers. Despite this, a substantial 42% of homeowners have surpassed the average tenure, suggesting that a wave of inventory could enter the market as these long-term owners decide to sell, potentially aided by the return of 4.9% of buyers.
Washington, DC; Arlington/Alexandria, Virginia
This dynamic region, recognized for its high teleworking population, is set to experience a surge in housing demand as remote work trends shift. The proportion of remote workers in this area witnessed a significant decline of 21 percentage points in 2022, indicating a strong return to in-office work. This shift is expected to drive increased demand in the market. For first-time buyers, the market offers a solid entry point, with one in five listings falling within their budget. Affordability is moderate, with 15.8% of renters able to purchase a median-priced home, and a projected 4.8% of buyers expected to return to the market.
The Road Ahead: A Rejuvenated Market
The 2024 housing market is poised for a dramatic transformation. The confluence of falling mortgage rates, recovering affordability, and pent-up demand from both buyers and sellers will create a significantly more active and dynamic environment. While challenges such as inventory shortages in certain markets will persist, the overall trajectory points toward a robust recovery.
For buyers, 2024 presents a window of opportunity to re-enter the market with more favorable borrowing terms. Sellers, many of whom have been on the sidelines due to high rates, will find renewed confidence in listing their properties. This increased activity will benefit realtors, mortgage lenders, and the broader housing industry, creating a positive feedback loop that drives further growth.
As we look toward 2024, the markets identified
