The 10 Hottest US Real Estate Markets Set for a 2024 Rebound
The US housing market is bracing for a dramatic comeback in 2024, with the National Association of Realtors (NAR) predicting a surge in home sales as mortgage rates decline. After two challenging years marked by skyrocketing interest rates and shrinking inventory, the market is poised for a significant turnaround, bringing much-needed relief to buyers, sellers, and real estate professionals alike.
In 2023, the housing market experienced a historic slowdown, with home sales projected to drop approximately 18%—the most significant 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. This downturn was primarily driven by soaring mortgage rates, which peaked near 7.8% in late October 2023, pushing the dream of homeownership out of reach for countless Americans.
Despite the steep drop in demand, home prices remained stubbornly high. The persistent shortage of available homes meant that even with fewer buyers competing, prices continued to climb, exacerbating financial stress for prospective homeowners. However, the outlook for 2024 offers a beacon of hope.
According to NAR projections, the 30-year fixed mortgage rate is expected to fall to an average of 6.3% in 2024. While still higher than the ultra-low rates of recent years, this represents a significant improvement that is anticipated to re-energize the market. The Federal Reserve is projected to cut interest rates four times throughout 2024, beginning in the spring, which should help ease affordability pressures.
“The decline in mortgage rates is expected to draw more buyers, including those returning to the market, consequently bolstering demand for housing,” NAR researchers 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.”
This anticipated improvement in affordability is expected to spark a resurgence in market activity. NAR forecasts a 19% increase in new home sales and a 13% rise in existing home sales, leading to substantial gains for real estate professionals. Sellers can also look forward to home price appreciation as demand strengthens.
The 10 Markets Poised for Explosive Growth
To identify where this renewed activity will be most concentrated, NAR analyzed the 100 largest metropolitan areas in the US, focusing on markets with the highest levels of pent-up demand. These “sleeping giants” are expected to see a surge in transactions as affordability improves and buyer confidence returns. The analysis considered factors such as Q3 2023 home price growth, the share of renters who can afford a median-priced home, and the potential pool of returning buyers if rates drop to 6.5% or lower. Additional considerations included job growth, income growth, and crime rates.
Here are the 10 markets that stand out as the hottest in 2024:
Austin, Texas
Despite experiencing a 7.7% decline in home prices in 2023, Austin remains a prime candidate for significant market activity. This Texas hub attracts a substantial pool of “returning” buyers—those who could once afford a home but were priced out by rising rates. If mortgage rates fall to 6.5%, an estimated 5.1% of all households in the Austin metro area could once again afford the median-priced home.
Austin’s enduring appeal lies in its robust job market and the influx of high-earning Millennials relocating from other states. While housing costs remain a challenge, the combination of returning buyers and new high-income residents is expected to fuel a strong rebound in sales activity. According to the Austin Board of Realtors, the market has already shown positive signs of recovery.
Dallas, Texas
The Dallas metro area boasts one of the fastest-growing job markets in the nation, with job growth exceeding 4% year-over-year. This economic dynamism creates a fertile ground for housing market growth. With 22% of renters in Dallas able to afford a median-priced home, a substantial segment of the population stands to benefit from falling mortgage rates.
As rates ease in 2024, housing activity in Dallas is expected to increase significantly. The city’s strong economic fundamentals, combined with improving affordability, position it as a major beneficiary of the national market rebound.
Dayton, Ohio
Dayton stands out for its affordability and abundance of options for first-time buyers. More than half of the listings in this market are within reach for first-time homebuyers, offering a more accessible entry point into homeownership. When combined with a strong local job market, this affordability factor is expected to drive substantial demand as mortgage rates decline.
For those looking to move up or make a lifestyle change, Dayton presents a compelling value proposition. The combination of affordability and job growth makes it a prime location for buyers seeking more space or a better quality of life without the premium prices of larger coastal cities.
Durham/Chapel Hill, North Carolina
Part of the renowned Research Triangle, the Durham/Chapel Hill area features the highest share of “returning” buyers among the top 10 markets. An estimated 6% of households in this metro area could regain purchasing power if mortgage rates drop to 6.5%. While the market faces a shortage of listings affordable to first-time buyers, this is offset by tremendous wage growth.
Average earnings in the Durham/Chapel Hill area have risen by 13 percentage points from the previous year, helping to bridge the affordability gap for many residents. This combination of returning buyers and rising incomes positions the Research Triangle for a robust rebound in 2024.
Harrisburg, Pennsylvania
Harrisburg offers a compelling mix of affordability and economic opportunity. More than 30% of renters in this market can already afford a median-priced home, and the area is successfully attracting high-earning renters from other states. With anticipated declines in mortgage rates next year, both inventory and buying activity are expected to grow further.
A notable trend in Harrisburg is the high rate of homeownership tenure. Forty-two percent of homeowners have surpassed the average tenure of 15 years, suggesting that as rates drop, many existing homeowners will be motivated to sell, thereby increasing inventory and providing more options for buyers.
Houston, Texas
Houston, the third Texas market to make the list, benefits from strong job and wage growth that boosts housing activity. Affordability in Houston surpasses that of most markets across the country, making it an attractive destination for homebuyers. What makes Houston particularly noteworthy is the fourfold increase in wages compared to the national level.
This substantial wage growth, combined with attractive home prices, positions Houston for significant market activity in 2024. As mortgage rates ease, the pent-up demand from both local and relocating buyers is expected to drive sales to new heights.
Nashville, Tennessee
Nashville’s market is poised for a resurgence driven by the anticipated return of buyers. The city’s strong job market continues to attract high-earning Millennials, adding to the pool of potential homebuyers. However, Nashville faces a significant housing shortage, particularly in the price range affordable to first-time buyers.
Despite this inventory challenge, the prospect of falling mortgage rates could unlock substantial pent-up demand. The combination of returning buyers and new high-income residents positions Nashville for a strong rebound, provided that new construction can help alleviate the supply constraints.
Philadelphia, Pennsylvania
The Philadelphia metro area is set for a boost driven by pent-up demand from both buyers and sellers. As the rate lock-in effect begins to ease next year, more homeowners are expected to list their properties, increasing inventory. Forty-four percent of homeowners in Philadelphia have surpassed the 17-year mark, significantly exceeding the area’s average tenure.
For first-time buyers, Philadelphia offers more affordable purchase options compared to most markets across the country. This combination of increasing inventory and accessible price points positions the city for a strong rebound in 2024.
Portland, Maine
Following San Jose, Portland has attracted the most Millennial renters earning over $100K. This influx of high-earning residents, combined with the city’s lowest violent crime rate among the top 100 metro areas, makes it an appealing destination. However, fewer than 10% of listings in Portland are within reach for first-time buyers.
The key to Portland’s rebound lies in its existing homeowners. With about 42% of homeowners having exceeded the average tenure, there is significant potential for increased inventory as these owners decide to sell their homes. As mortgage rates decline, Portland could experience a surge in transactions as these rate-locked sellers re-enter the market.
Washington, DC; Arlington/Alexandria, Virginia
This metro area, encompassing the nation’s capital and its surrounding suburbs, is expected to see increased market activity as more people return to their offices. The proportion of remote workers in this region witnessed a significant decline, plummeting by 21 percentage points in 2022. This trend is anticipated to drive higher demand in the housing market.
While affordability remains a challenge, with only one in five listings falling within the budget range for first-time buyers, the pent-up demand from returning workers and the potential easing of the rate lock-in effect position this area for a solid rebound in 2024.
Factors Driving the 2024 Rebound
The anticipated surge in US home sales in 2024 is not
