2024 Real Estate Forecast: Top 10 Markets Poised for Sales Surge as Mortgage Rates Drop
The US housing market is bracing for a dramatic turnaround in 2024. After two years of sluggish activity, the National Association of Realtors (NAR) predicts a significant rebound in home sales, driven by falling mortgage rates and pent-up buyer demand. While the market won’t return to pre-pandemic frenzies, 2024 is shaping up to be a much busier year for buyers, sellers, and real estate professionals alike.
The 2023 Housing Market: A Year in Review
To understand the 2024 forecast, we first need to look at the challenges of 2023. The housing market experienced one of its weakest years on record, with sales projected to fall around 18%—the largest annual decline in at least 15 years. Fewer than four million homes were expected to change hands for the first time since 2010, before the post-financial crisis recovery.
Several factors contributed to this slowdown:
Soaring Mortgage Rates: Prospective buyers were pummeled by the highest mortgage rates in decades. The 30-year fixed rate peaked near 7.8% in late 2023 as the Federal Reserve aggressively raised interest rates to combat inflation.
Affordability Crisis: Even though demand weakened, home prices didn’t decline meaningfully. The persistent shortage of housing inventory kept prices elevated, creating a significant affordability challenge for many buyers.
Rate Lock-In Effect: Homeowners who locked in ultra-low rates during the pandemic were reluctant to sell, further constraining supply and exacerbating the inventory crunch.
The 2024 Outlook: A Return to Normalcy?
The NAR’s 2024 forecast offers a beacon of hope for the beleaguered housing market. A projected decline in mortgage rates is expected to lure buyers back to the market, revitalizing activity across the country.
Key projections for 2024 include:
Mortgage Rate Decline: The 30-year fixed mortgage rate is expected to fall to an average of 6.3% in 2024. While still historically high, this represents a significant improvement from the 2023 peak.
Federal Reserve Action: The NAR anticipates the Federal Reserve will cut interest rates four times in 2024, starting in the spring, which would help bring mortgage rates down.
Sales Rebound: The firm projects that new home sales will rise 19% and existing property sales will grow 13%. This would bring the total number of homes sold to around 4.7 million, significantly higher than 2023 levels.
Price Growth: Home prices are expected to continue appreciating, though at a more moderate pace than in recent years. The NAR forecasts a 0.9% increase in median home prices for 2024.
“The decline in mortgage rates is expected to draw more buyers, including those returning to the market, consequently bolstering demand for housing,” NAR researchers wrote. “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.”
What’s Driving the Turnaround?
Several converging trends are expected to fuel the 2024 housing market revival:
Improving Affordability: As mortgage rates decline, the monthly cost of homeownership will decrease, making homes more affordable for a larger segment of the population. This improvement in affordability is the primary driver of the projected sales surge.
Pent-Up Demand: The past two years have seen significant pent-up demand from buyers who were priced out or deterred by high rates. As conditions improve, this latent demand is expected to be unleashed, creating a wave of market activity.
Inventory Stabilization: While the housing shortage won’t be solved overnight, the anticipated easing of the rate lock-in effect should lead to a modest increase in inventory. More homeowners will be willing to list their properties as mortgage rates fall, providing more options for buyers.
Economic Resilience: The US economy has demonstrated surprising resilience despite rising interest rates. Continued job growth and wage increases will further support housing demand in 2024.
Top 10 Markets Poised for Growth
To identify the areas most likely to benefit from this market turnaround, the NAR analyzed the 100 largest metropolitan areas, evaluating 10 key factors. These markets are considered “sleeping giants” where housing transactions are expected to explode after a period of dormancy.
Here are the 10 cities with the strongest pent-up demand heading into 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 Rates Fall: 5.1%
Why It’s Poised for Growth: Austin boasts one of the largest pools of “returning” buyers. Despite ongoing affordability challenges, the city continues to attract high-earning Millennials from other states. This influx of talent, combined with the return of previous buyers, is expected to fuel significant market activity. Home sales in Austin have already shown a positive turnaround, according to the Austin Board of Realtors.
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 Rates Fall: 4.9%
Why It’s Poised for Growth: Dallas had the second-fastest growing job market among the 100 largest metros in 2023, creating over 4% more jobs than the previous year. With 22% of renters able to afford the median-priced home, housing activity is expected to increase significantly as mortgage rates decline in 2024.
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 Rates Fall: 4.7%
Why It’s Poised for Growth: Dayton stands out for its affordability and robust job market. First-time buyers will find more than half of the listings in this market within their price range. The strong local economy is expected to enable more renters to transition to homeownership in 2024.
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 Rates Fall: 5.6%
Why It’s Poised for Growth: The Research Triangle area leads the nation with the highest share of “returning” buyers, accounting for 6% of households that can once again afford a home. While the market faces a shortage of affordable listings for first-time buyers, tremendous wage growth—with average earnings rising 13 percentage points—is supporting demand.
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 Rates Fall: 5.3%
Why It’s Poised for Growth: Already affordable for over 30% of renters, Harrisburg is also attracting high-earning renters from other states. With anticipated mortgage rate declines, both inventory and buying activity are expected to grow further as existing homeowners list their properties. Notably, 42% of homeowners in this area have exceeded the average tenure of 15 years, indicating potential for increased sales.
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 Rates Fall: 4.3%
Why It’s Poised for Growth: The third Texas market on this list, Houston’s strong job and wage growth, combined with housing affordability, will boost activity in 2024. The city’s wage growth has outpaced the national level fourfold, creating a robust economic environment for housing demand.
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 Rates Fall: 4.6%
Why It’s Poised for Growth: Nashville is another market expected to see a resurgence of “returning” buyers in 2024. A strong job market continues to attract high-earning Millennials, though the city faces a significant shortage of affordable listings for first-time buyers.
Philadelphia, Pennsylvania
2023 Home Price Growth: 4.6%
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