The 10 Real Estate Markets Poised for a 2024 Boom as Home Sales Surge
The U.S. housing market is gearing up for a dramatic turnaround in 2024, with the National Association of Realtors (NAR) predicting a robust rebound in home sales after two years of sluggish activity. Falling mortgage rates are expected to lure buyers back to the market, unlocking pent-up demand in key metropolitan areas.
The NAR’s latest report indicates that U.S. home sales are projected to plummet approximately 18% in 2023, marking the largest single-year decline in at least 15 years. Fewer than four million homes are expected to change hands for the first time since 2010, a period just before the recovery from the 2008 financial crisis.
This slowdown can be attributed to a perfect storm of high mortgage rates and limited inventory. Prospective buyers have been pummeled by the highest borrowing costs in decades, with the 30-year fixed mortgage rate peaking near 7.8% in late October as interest rates skyrocketed. Despite the cooling demand, home prices have remained stubbornly high due to a persistent lack of housing supply, adding further strain on financially stressed buyers.
However, the outlook for 2024 offers a beacon of hope for buyers, sellers, and realtors alike. The NAR projects that the 30-year fixed mortgage rate will tumble to an average of 6.3% next year, a significant improvement from current levels. This decline is expected to be driven by four Federal Reserve 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 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.\”
Improved affordability is anticipated to fuel a resurgence in housing market activity. The NAR forecasts that new home sales will surge by 19% and existing home sales will climb by 13%, creating significant windfalls for realtors. Homeowners can also expect price gains, though likely more moderate than in recent years.
The 10 Cities Poised for a 2024 Comeback
To identify the markets set to benefit most from this anticipated rebound, the NAR analyzed the 100 largest U.S. metro areas, focusing on regions with the most significant pent-up demand. The analysis considered factors such as home price appreciation in Q3 2023, the share of renters who can afford to buy a median-priced home, the potential for buyer re-entry if rates fall to 6.5%, job and income growth, and crime rates.
Here are the 10 cities where the NAR expects home transactions to explode 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%
Expert Analysis: Austin stands out due to one of the largest pools of potential \”returning\” buyers. If mortgage rates drop to 6.5%, an additional 5.1% of households in this market will gain the financial capacity to purchase a median-priced home. Despite the recent price correction, the city continues to attract high-earning millennials, with many earning over $100,000 relocating from other states. While housing costs remain a challenge, this influx of affluent renters, combined with returning buyers, is expected to reignite the local market. The Austin Board of Realtors has already observed a positive turnaround in home sales activity, signaling that the revival may be underway.
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%
Expert Analysis: Dallas boasts the second-fastest-growing job market among the 100 largest metro areas, with the economy adding over 4% more jobs compared to the previous year. This robust employment growth, coupled with the fact that 22% of renters can already afford a median-priced home, positions Dallas for a significant surge in housing activity once mortgage rates decline. The combination of job security and improving affordability will make homeownership an increasingly attainable goal for a larger segment of the population.
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%
Expert Analysis: Dayton emerges as a prime market for first-time homebuyers, offering a wealth of affordable options. More than half of the listings in this market are within reach for first-time buyers, a rarity in today’s housing landscape. Furthermore, the area’s strong job market will enable more renters to transition into homeownership in 2024. The combination of affordability and economic opportunity makes Dayton a compelling destination for those looking to enter 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%
Expert Analysis: The Research Triangle, encompassing Durham and Chapel Hill, is set for a significant boost. This metro area leads with the highest share of \”returning\” buyers, accounting for 6% of households that will regain the ability to afford a home if mortgage rates fall. While the market faces a shortage of affordable listings for first-time buyers, the tremendous wage growth—with average earnings rising 13 percentage points year-over-year—is closing the gap. This strong economic foundation, combined with the potential for increased buyer activity, positions Durham/Chapel Hill for a dynamic 2024.
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%
Expert Analysis: Harrisburg is already an attractive market for a substantial portion of renters, with over 30% able to afford a median-priced home. Additionally, the area is drawing high-earning renters from out of state, drawn by its affordability and quality of life. With the anticipated decline in mortgage rates, both inventory and buying activity are expected to grow further as existing homeowners, many of whom have surpassed the average tenure of 15 years, decide to list their properties. This combination of inbound migration and existing homeowner turnover creates a fertile ground for market expansion.
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%
Expert Analysis: Yet another Texas Triangle city makes the list, with Houston poised for a significant rebound. Affordability and strong job and wage growth are the key drivers of this anticipated surge. While housing affordability for renters in Houston already surpasses that of most markets nationwide, the noteworthy aspect is the fourfold increase in wages, outpacing the national level. This rapid income growth, coupled with a healthy job market, will empower more residents to achieve homeownership in 2024.
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%
Expert Analysis: The anticipated resurgence of \”returning\” buyers will be a significant factor in Nashville’s market growth. The city’s vibrant job market continues to attract many millennials earning over $100,000, further fueling demand. However, Nashville faces a severe shortage of listings at price points affordable to first-time buyers. The key to unlocking the market’s full potential will be the successful conversion of these aspirational buyers into actual purchasers as mortgage rates decline.
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%
Expert Analysis: Philadelphia is set for a significant 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 surpassed the 17-year mark, well above the average tenure for the area. This large cohort of long-term homeowners may be eager to downsize or relocate, unleashing a wave of inventory. Additionally, first-time buyers in Philadelphia have twice as many affordable purchase options compared to most other markets across the country, providing a solid foundation for market
