2024 Housing Market Surge: 10 US Cities Poised for Major Real Estate Rebound
The US housing market is on the verge of a dramatic turnaround. After two years of sluggish activity marked by soaring mortgage rates that priced countless buyers out of the market, the National Association of Realtors (NAR) predicts a significant rebound in 2024. This shift is expected to be driven by falling interest rates, which will breathe life back into the market and create windfalls for realtors, sellers, and buyers alike.
In 2023, the NAR reported a staggering 18% plunge in home sales, the largest decline in at least 15 years. Fewer than four million homes changed hands, the lowest volume since 2010, just as the nation was beginning its recovery from the financial crisis. The primary culprit behind this downturn was the sky-high mortgage rates. The rate on a 30-year fixed mortgage peaked near 7.8% in late October 2023, decimating affordability for prospective buyers.
Surprisingly, this lack of demand didn’t translate into a meaningful drop in home prices. Instead, sales values continued to climb because the supply of available homes remained critically low, exacerbating the financial strain on hopeful buyers.
However, the outlook for 2024 offers a beacon of hope. The NAR projects that the 30-year fixed mortgage rate will fall to an average of 6.3% next year. While still elevated compared to the historical lows of recent years, this represents a significant improvement that is expected to lure buyers back to the market. The Federal Reserve is anticipated to implement four interest rate cuts in 2024, beginning in the spring, further easing the financial burden on consumers.
“The decline in mortgage rates is expected to draw more buyers, including those returning to the market, consequently bolstering demand for housing,” the NAR noted in its report. “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 anticipated improvement in affordability is projected to trigger a resurgence in housing market activity. The NAR forecasts a 19% increase in new home sales and a 13% rise in existing home sales, creating substantial opportunities for realtors. Additionally, sellers can expect to benefit from continued home price appreciation.
To identify the markets most poised to capitalize on this rebound, the NAR compiled a list of 10 metropolitan areas with the greatest pent-up demand. These cities are described as “sleeping giants” where home transactions are expected to surge after a period of dormancy. The analysis considered 10 factors across the 100 largest US markets, including home price growth in the third quarter of 2023 compared to the previous year, the percentage of renters who can afford to buy a median-priced home, and the projected return of buyers if mortgage rates drop to 6.5%. Other crucial metrics included job growth rates, income growth rates, and crime rates.
Here are the 10 cities identified by the NAR as having the strongest pent-up demand heading into 2024:
Austin, Texas
Austin, Texas, despite facing housing cost challenges, stands out for its dynamic economic landscape. In 2023, the city experienced a -7.7% home price growth. However, a notable trend is the influx of high-earning Millennials, many earning over $100,000, relocating from other states. This demographic shift, combined with a significant pool of “returning” buyers, is expected to fuel market growth. If mortgage rates fall to 6.5% in 2024, an estimated 5.1% of all households in the Austin area could regain the financial capacity to afford a median-priced home. The Austin Board of Realtors has already observed a positive turnaround in home sales activity, signaling the market’s responsiveness to these changing dynamics.
Dallas, Texas
Dallas, Texas, boasts one of the fastest-growing job markets among the 100 largest metropolitan areas. In 2023, the local economy generated over 4% more jobs compared to the previous year. This robust employment environment, coupled with a healthy percentage of renters—22% of whom can afford a median-priced home—positions Dallas for significant activity in 2024 as mortgage rates decline. The anticipated drop in interest rates is expected to translate into increased housing transactions as more renters achieve homeownership.
Dayton, Ohio
Dayton, Ohio, offers a compelling combination of affordability and accessibility for first-time homebuyers. The city presents a substantial inventory of affordable options, with buyers able to afford more than half of the available listings. In 2023, Dayton saw a remarkable 9.1% home price growth. Furthermore, its strong job market is anticipated to facilitate a greater number of renters transitioning to homeownership in the coming year. With 30.6% of renters currently able to afford a median-priced home, the potential for pent-up demand is significant.
Durham/Chapel Hill, North Carolina
The Research Triangle area, including Durham and Chapel Hill, North Carolina, stands out for its high concentration of “returning\” buyers. The Durham metro area leads with 6% of households that can once again afford a home if mortgage rates fall to 6.5%. While the market faces a shortage of affordable listings for first-time buyers, the region has experienced tremendous wage growth, with average earnings rising by 13 percentage points from the previous year. This income surge, combined with the potential return of buyers, is expected to invigorate the market. In 2023, home prices in this area saw a modest 2.6% increase.
Harrisburg, Pennsylvania
Harrisburg, Pennsylvania, is an attractive market for both existing residents and newcomers. The area is already affordable for over 30% of its renters, and it is additionally attracting high-earning renters from other states. In 2023, Harrisburg experienced an 8.5% home price appreciation. With the anticipated decline in mortgage rates, both inventory and buying activity are expected to grow further as existing homeowners, many of whom have exceeded the average tenure of 15 years, decide to list their properties.
Houston, Texas
Rounding out the Texas Triangle on this list is Houston. The city benefits from strong job and wage growth, which, combined with its housing affordability, is expected to drive significant market activity in 2024. While housing affordability for renters in Houston surpasses that of most markets across the country, the most noteworthy aspect is the fourfold increase in wages, outpacing the national level. In 2023, Houston experienced a 3.7% home price growth, with 23.8% of renters able to afford a median-priced home.
Nashville, Tennessee
Nashville, often referred to as “Music City,\” is poised for a resurgence driven by the anticipated return of buyers. The city’s strong job market continues to attract many Millennial renters earning over $100,000. However, Nashville faces a notable challenge in the form of a severe housing shortage, particularly in the price ranges that first-time buyers can afford. In 2023, the market saw a modest 0.7% home price growth, with only 13.8% of renters able to afford a median-priced home. If mortgage rates fall, an estimated 4.6% of households could return to the market as buyers.
Philadelphia, Pennsylvania
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 in 2024. A substantial 44% of homeowners in this market have surpassed the average tenure of 17 years, indicating a strong potential for inventory to increase as these owners decide to sell. For first-time buyers, Philadelphia offers twice the number of affordable purchase options compared to most other areas across the country. In 2023, the city recorded a 4.6% home price growth, with 21.5% of renters able to afford a median-priced home.
Portland, Maine
Portland, Maine, has emerged as a magnet for high-earning Millennial renters, attracting the second-highest number of such individuals after San Jose. The city also boasts the lowest violent crime rate among the 100 largest metro areas, making it a highly desirable location. However, Portland faces a significant hurdle in that fewer than 10% of its listings are within reach for first-time buyers. Given that approximately 42% of homeowners have exceeded the average tenure, there is considerable potential for an increase in inventory as these rate-locked sellers decide to list their homes. In 2023, Portland experienced a notable 12.3% home price growth, with 20.2% of renters able to afford a median-priced home.
Washington, DC; Arlington/Alexandria, Virginia
The Washington, DC, metropolitan area, including Arlington and Alexandria in Virginia, is expected to see increased demand as the proportion of remote workers, which declined significantly in 2022, continues to decrease. This trend is likely to drive more people back to their offices, stimulating the housing market. One in five listings in this market falls within the budget range for first-time buyers. In 2023, the area experienced a 3.4% home price growth, with 15.8% of renters able to
