The Hottest Housing Markets of 2024: Pent-Up Demand Ready to Explode
After a turbulent 2023, the US housing market is poised for a dramatic comeback. The National Association of Realtors predicts a surge in home sales as mortgage rates cool, unlocking pent-up demand across the country. Here are the 10 metro areas set to lead the charge.
The US housing market has been through a roller coaster ride over the past few years. After the pandemic-fueled frenzy of 2021 and early 2022, the Federal Reserve’s aggressive interest rate hikes sent shockwaves through the industry. By 2023, the National Association of Realtors (NAR) reported that home sales were on track to plummet about 18%, marking the biggest decline in at least 15 years. Fewer than four million homes were expected to change hands for the first time since 2010, just as the market was recovering from the financial crisis.
The primary culprit for this slowdown was the sky-high mortgage rates. The rate on a 30-year fixed mortgage peaked near 7.8% in late October 2023, making homeownership less affordable than it had been in decades. Despite the drop in demand, home prices remained stubbornly high due to a persistent inventory shortage, adding insult to injury for financially stressed buyers.
However, the tide is turning. As we head into 2024, the NAR projects a significant rebound. A 30-year fixed mortgage rate is expected to tumble to an average of 6.3%, a marked improvement that will lure buyers back to the market. The Federal Reserve is anticipated to cut interest rates four times in 2024, beginning in the spring, further easing affordability constraints.
“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 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.”
This shift is expected to ignite housing market activity across the board. The NAR forecasts a 19% rise in new home sales and a 13% increase in existing property sales, creating windfalls for realtors and boosting home prices. But which markets will benefit the most from this pent-up demand?
The NAR has identified 10 metropolitan areas that are poised for an explosion in housing activity. These “sleeping giants” have accumulated significant demand during the recent slowdown and are ready to spring back to life. The selection was based on an analysis of 10 factors across the 100 largest US markets, including Q3 2023 home price growth, the share of renters who could 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 hottest real estate markets for 2024:
Austin, Texas
Home Price Growth in 2023: -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 has long been a magnet for tech talent and young professionals, but the city’s housing market has cooled recently. Despite a 7.7% drop in home prices in 2023, pent-up demand is bubbling beneath the surface. If mortgage rates fall to 6.5%, an additional 5.1% of households will have the means to afford the median-priced home, unlocking a significant pool of buyers.
The city’s robust job market, particularly in the tech sector, continues to attract high-earning Millennials from other states. While housing costs remain a challenge, the influx of these buyers, combined with those returning to the market, is expected to fuel a resurgence in activity. In fact, the Austin Board of Realtors has already reported a positive turnaround in home sales, signaling the start of the rebound.
Dallas, Texas
Home Price Growth in 2023: 1.9%
Share of Renters Who Can Afford a Median-Priced Home: 21.5%
Share of Returning Buyers If Mortgage Rates Fall: 4.9%
The Dallas-Fort Worth metroplex has been one of the fastest-growing job markets in the nation, with the local economy expanding by over 4% year-over-year. This robust job growth has created a fertile environment for housing demand. With 21.5% of renters able to afford a median-priced home, the market is well-positioned for an upswing as mortgage rates decline.
The Dallas market offers a diverse range of housing options, from affordable starter homes to luxury properties. The combination of strong job growth, income gains, and a healthy supply of inventory makes it an attractive destination for buyers. As mortgage rates ease, we can expect to see a significant increase in transaction volume.
Dayton, Ohio
Home Price Growth in 2023: 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 as one of the most affordable markets on this list, with 30.6% of renters able to afford a median-priced home. This exceptional affordability, combined with a strong job market, makes it a prime candidate for a housing boom. First-time buyers will find a wealth of options, as they can afford more than half of the listings in the market.
The city’s economic revitalization, driven by job creation and wage growth, is attracting new residents and boosting demand. As mortgage rates fall, more renters will be able to make the leap to homeownership, further fueling market activity. Dayton’s low price points and high affordability levels make it a compelling opportunity for buyers seeking value.
Durham/Chapel Hill, North Carolina
Home Price Growth in 2023: 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 region, encompassing Durham and Chapel Hill, is a hub of innovation and economic growth. The area boasts the highest share of “returning” buyers among the top 10 markets, with 6% of households gaining affordability if rates drop to 6.5%. This pent-up demand is a significant tailwind for the market.
While the region faces a shortage of affordable listings for first-time buyers, the strong wage growth—up 13 percentage points from the previous year—is helping to bridge the gap. The combination of a high-demand location, a well-educated workforce, and easing mortgage rates is set to create a dynamic housing market in 2024.
Harrisburg, Pennsylvania
Home Price Growth in 2023: 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 offers a compelling blend of affordability and opportunity. More than 30% of renters in this market can already afford a median-priced home, and the anticipated decline in mortgage rates will only enhance this accessibility. The area is also attracting high-earning renters from other states, drawn by the lower cost of living and strong job market.
With 42% of homeowners having surpassed the average tenure of 15 years, there’s significant potential for inventory to increase as these owners decide to sell. This combination of pent-up buyer demand and potential seller inventory could lead to a surge in market activity in 2024.
Houston, Texas
Home Price Growth in 2023: 3.7%
Share of Renters Who Can Afford a Median-Priced Home: 23.8%
Share of Returning Buyers If Mortgage Rates Fall: 4.3%
The third Texas market to make the list, Houston combines affordability with robust economic growth. The city’s housing market benefits from strong job and wage gains, with wages outpacing the national level fourfold. This economic strength is fueling demand for housing despite the recent market cooldown.
While affordability for renters is higher than in most markets, the significant wage growth is helping to push more households into homeownership. As mortgage rates ease, the Houston market is well-positioned for a substantial increase in sales activity.
Nashville, Tennessee
Home Price Growth in 2023: 0.7%
Share of Renters Who Can Afford a Median-Priced Home: 13.8%
Share of Returning Buyers If Mortgage Rates Fall: 4.6%
Nashville’s Music City charm continues to attract a steady stream of residents, particularly high-earning Millennials. The city’s vibrant economy and growing job market are major draws, but the market faces a significant challenge: a severe housing shortage for first-time buyers.
Despite this constraint, the anticipated resurgence of “returning” buyers could provide the catalyst needed for market growth. As mortgage rates decline, more buyers will enter the market, creating demand that could spur new construction and inventory increases. The combination of a strong job market and pent-up buyer demand makes Nashville a market to watch in 2024.
Philadelphia, Pennsylvania
Home Price Growth in 2023:
