The 10 Hottest US Real Estate Markets Poised for a 2024 Sales Surge
After Two Sluggish Years Driven by Soaring Interest Rates, a Dramatic Rebound Is on the Horizon, With Experts Predicting a Major Uptick in Home Sales and a Return of Pent-Up Buyer Demand
The US housing market is bracing for a seismic shift in 2024, with projections indicating a robust rebound that could finally bring relief to buyers and sellers alike. Following a historically challenging period marked by the sharpest decline in home sales in over a decade, a combination of falling mortgage rates and easing affordability pressures is expected to ignite a surge in market activity. According to the latest analysis by the National Association of Realtors (NAR), 2024 is shaping up to be a year of renewed opportunity, potentially reversing the fortunes of a market that has been largely dormant.
For much of 2023, the housing landscape was defined by a brutal reality for prospective buyers. The rapid ascent of interest rates, pushing the average 30-year fixed mortgage rate to peaks not seen in over two decades, created an affordability crisis of unprecedented scale. This financial squeeze led to a dramatic contraction in sales, with the NAR forecasting a staggering 18% drop in transactions for 2023. This decline would mark the most significant contraction since the aftermath of the 2008 financial crisis, leaving fewer than four million homes changing hands for the first time since 2010.
The dual blow of high mortgage rates and a persistent shortage of available homes exacerbated the difficulties for buyers. Despite the cooling demand, home prices proved remarkably resilient, continuing to climb in many markets. This phenomenon, driven by a severe lack of inventory, meant that even as fewer buyers could afford to enter the market, those who could were met with limited choices and elevated costs, creating a deeply frustrating environment.
However, as the calendar turns to 2024, the outlook shifts dramatically. The NAR’s projections for the coming year paint a picture of significant improvement, with a notable decrease in mortgage rates expected to be the primary catalyst for change. The firm anticipates that the Federal Reserve will implement a series of interest rate cuts, beginning in the spring, bringing the average 30-year fixed mortgage rate down to an estimated 6.3%. While this figure remains elevated compared to historical norms, it represents a substantial improvement over the near-7.8% highs of late 2023.
This projected decline in borrowing costs is expected to have a transformative effect on the market. “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.” This dual influx of buyers and sellers could finally unlock the pent-up demand that has been building for the past two years.
The implications of this shift extend to all corners of the market. The NAR forecasts a 19% increase in new home sales and a 13% rise in existing property sales for 2024. These figures suggest a significant revitalization of market activity, potentially creating a more dynamic and favorable environment for realtors, buyers, and sellers alike. Furthermore, the organization anticipates that home price gains will persist, albeit at a more sustainable pace, as the market finds a new equilibrium.
10 Metro Areas Poised for a 2024 Sales Boom
To identify the locations most likely to benefit from this anticipated market turnaround, the NAR has pinpointed 10 metropolitan areas exhibiting the strongest signs of pent-up demand. These “sleeping giants” have experienced a period of relative dormancy, but are now positioned for a significant surge in transaction volume as market conditions improve. The selection was based on a comprehensive analysis of 10 key factors across the nation’s 100 largest markets, including the trajectory of home prices, the affordability landscape for renters, and the potential for buyer re-entry should rates fall to 6.5% or lower. Additional considerations encompassed job and income growth dynamics, as well as local crime rates, painting a holistic picture of each market’s potential.
Below is a detailed look at each of the 10 metro areas identified by the NAR, including their 2023 home price performance, the proportion of renters who could afford a median-priced home, the projected share of returning buyers at lower rates, and expert commentary from the National Association of Realtors.
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 Commentary: “This region boasts one of the largest pools of ‘returning’ buyers. If interest rates drop to 6.5% in 2024, 5.1% of all households will once again have the means to afford the median-priced home. Despite ongoing housing cost challenges, a notable trend is emerging as many Millennials earning over $100,000 are relocating from other states to this market. While prices seem to be very sensitive to market changes, the influx of these high-earner Millennial renters, coupled with the presence of ‘returning’ buyers, is anticipated to fuel growth in the local housing market. According to the Austin Board of Realtors, home sales activity has already shown a positive turnaround.”
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 Commentary: \”Among the 100 largest metro areas, Dallas had the second fastest-growing job market. The local economy was able to create more than 4% additional jobs compared to the previous year. With 22% of renters able to afford to buy the median-priced home, housing activity will increase in this area as mortgage rates will fall 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 Mortgage Rates Fall: 4.7%
Expert Commentary: \”Dayton is not only affordable but also offers many affordable options to first-time buyers. These buyers can afford to purchase more than half of the listings in this market. Furthermore, a strong job market in this area will allow more renters to make the transition to homeownership next year.\”
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 Commentary: \”The Research Triangle could not be left off the list. The Durham metro area leads with the highest share of ‘returning’ buyers, accounting for 6% of the households that can afford again to buy a home. This area is lacking affordable listings for first-time buyers, but wage growth has been tremendous with average earnings rising by 13 percentage points from last year.\”
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 Commentary: \”While this area is already affordable for more than 30% of the renters, it’s also attracting high-earner renters from other states. In the meantime, with the anticipated decline in mortgage rates next year, both inventory and buying activity are expected to grow further in this area as existing homeowners sell their homes. Notably, 42% of homeowners have already surpassed the average tenure of 15 years for this area.\”
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 Commentary: \”Yet the third area of the Texas Triangle had made it to the list. Affordability and strong job and wage growth in Houston will boost activity in this market in 2024. While housing affordability for renters in Houston surpasses that of most markets across the country, the noteworthy aspect is the fourfold increase in wages, outpacing the national level.\”
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 Commentary: \”The anticipated resurgence of ‘returning’ buyers will also drive market growth in Nashville next year. In the meantime, a strong job market attracts many Millennial renters earning more than $100K. Nevertheless, this area faces a severe housing shortage of listings at the price range that first-time buyers can afford to purchase.\”
