The 10 Hottest Real Estate Markets in the US Poised for a 2024 Boom
The U.S. housing market is on the cusp of a dramatic comeback, with the National Association of Realtors (NAR) predicting a significant rebound in home sales for 2024. After a challenging year marked by high mortgage rates and limited inventory, a projected drop in interest rates is expected to unlock pent-up demand, reigniting activity across the country. For realtors, buyers, and sellers, this shift signals a much-needed revitalization.
The Turning Tide: Why 2024 Will Be Different
The past year has been undeniably tough for the housing market. Home sales plummeted by approximately 18% in 2023, the sharpest decline in at least 15 years. Fewer than four million homes changed hands, a level not seen since 2010, just before the recovery from the financial crisis. The primary culprit? Soaring mortgage rates, which peaked near 7.8% in late October 2023, pushing the dream of homeownership out of reach for countless Americans.
Surprisingly, this lack of affordability didn’t translate to a significant drop in home prices. With inventory remaining stubbornly low, prices continued to climb, adding another layer of difficulty for buyers already grappling with high interest rates. This perfect storm of high costs and limited supply created a stagnant market, leaving many buyers on the sidelines and sellers hesitant to list their homes.
However, the outlook for 2024 offers a ray of hope. The NAR projects that the average 30-year fixed mortgage rate will fall to around 6.3% next year. While this is still higher than the ultra-low rates of recent years, it represents a marked improvement that could make a significant difference for prospective buyers. The Federal Reserve is expected to cut interest rates four times in 2024, starting in the spring, which would further ease the pressure on mortgage rates.
This anticipated decline in borrowing costs is expected to draw more buyers back into the market, including those who have been waiting on the sidelines. “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 a recent 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.”
The ripple effects of this shift will be felt across the entire housing ecosystem. Improved affordability is predicted to spur a resurgence in market activity, with the NAR forecasting a 19% increase in new home sales and a 13% rise in existing home sales. This uptick in transactions will undoubtedly benefit realtors, who have weathered a quieter period. Sellers, too, should see positive developments, as home prices are expected to continue their upward trajectory, albeit at a more moderate pace.
The Hottest Markets: Where the Action Will Be
To identify the areas set to benefit most from this market turnaround, the NAR analyzed the 100 largest metropolitan areas in the U.S., creating a list of 10 markets with the most pent-up demand. These “sleeping giants” are on the verge of a significant increase in home transactions as buyers return to the fold. The analysis considered 10 key factors, including home price growth in Q3 2023, the percentage of renters who can afford a median-priced home, the potential for buyer re-entry if rates fall to 6.5%, job growth, income growth, and crime rates.
Here are the 10 markets poised for a boom 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, despite facing housing affordability challenges, is home to one of the largest pools of “returning” buyers. If interest rates drop to 6.5%, a significant 5.1% of households will regain the ability to afford the median-priced home. A notable trend in this market is the influx of high-earning Millennials (over $100,000 annually) relocating from other states. While prices have shown sensitivity to market changes, this steady stream of buyers, combined with returning demand, is expected to fuel substantial growth in the local housing market. The Austin Board of Realtors has already observed a positive turnaround in home sales activity, 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%
Dallas boasts the second-fastest-growing job market among the 100 largest metro areas, with the local economy expanding by over 4% compared to the previous year. This robust job growth, coupled with the fact that 22% of renters can currently afford a median-priced home, positions Dallas for significant activity as mortgage rates decline in 2024. The combination of strong economic fundamentals and improving affordability will make this Texas hub a hot spot for homebuyers.
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 stands out for its affordability and wealth of options for first-time buyers. In this market, buyers can afford more than half of the available listings, making the path to homeownership significantly clearer. The strong job market further supports this trend, allowing more renters to transition into homeownership in the coming year. Dayton’s combination of affordability and economic stability makes it an attractive destination for those seeking value and opportunity.
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 a major draw for talent and investment. This metro area leads with the highest share of “returning” buyers, with 6% of households gaining affordability if rates drop to 6.5%. While there’s a shortage of affordable listings for first-time buyers, the market is experiencing tremendous wage growth, with average earnings rising by 13 percentage points year-over-year. This economic vitality is expected to drive increased demand and activity in the Durham/Chapel Hill market.
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 affordable for over 30% of its renters but is also attracting high-earning individuals from other states. As mortgage rates decline in 2024, both inventory and buying activity are anticipated to grow. A significant portion of homeowners (42%) have already surpassed the average tenure of 15 years for this area, indicating a potential wave of sellers looking to move. This pent-up supply, combined with returning buyers, is set to energize the Harrisburg market.
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%
Houston, the third Texas market on this list, is poised for a strong 2024 thanks to its affordability and robust job and wage growth. Housing affordability for renters in Houston surpasses that of most markets across the country, and wage growth has quadrupled the national level. This impressive economic performance, combined with favorable housing conditions, will boost activity in the Houston market as buyers return in force.
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, often referred to as “Music City.” This market is attracting many Millennial renters earning over $100,000, drawn by its vibrant culture and economic opportunities. However, Nashville faces a significant housing shortage of listings in the price range affordable for first-time buyers. Addressing this supply gap will be crucial for the market to fully realize its potential 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 for a boost driven by pent-up demand from both buyers and sellers as the rate lock-in effect begins to ease. Forty-four percent of homeowners in this market have exceeded the average tenure of 17 years, suggesting a potential increase
