These Will Be the 10 Hottest Housing Markets in the US as Home Sales Surge in 2024, According to the National Association of Realtors
Next year will be much busier for the housing market, the National Association of Realtors says. — Davel5957/Getty Images
US home sales will rebound strongly in 2024, according to the National Association of Realtors.
Falling mortgage rates will lure buyers back to the market after two quiet years.
Here are 10 cities that are about to benefit from pent-up demand from buyers.
The housing market is on the brink of a dramatic turnaround after back-to-back down years, according to the National Association of Realtors (NAR).
US home sales are on pace to plummet about 18% in 2023, the NAR noted in a recent report, which would be the biggest drop in at least 15 years. Fewer than four million houses will change hands for the first time since 2010, which was just before the recovery from the financial crisis.
Prospective buyers were pummeled by the highest mortgage rates in decades. The rate on a 30-year fixed mortgage peaked near 7.8% in late October as interest rates skyrocketed.
Surprisingly, weaker demand didn’t bring down home prices meaningfully, the NAR found. Instead, sale values kept increasing since there simply weren’t enough houses on the market, which added insult to injury for financially stressed buyers.
However, 2024 will give everyone — from buyers to sellers to realtors — a reason to celebrate.
A 30-year fixed mortgage rate will tumble to an average of 6.3% next year, according to projections from the NAR, which is far from ideal but is still a marked improvement. The firm projects that the Federal Reserve will cut interest rates four times in 2024, starting in the spring.
“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 the 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.”
Improvements in affordability will lead to a resurgence in housing market activity, according to the NAR. It expects new home sales to rise 19% and existing property sales to grow 13%, which will lead to windfalls for realtors. Sellers should also enjoy home price gains, the NAR said.
10 Cities with Strong Pent-Up Demand in 2024
To determine which real estate markets will reap the rewards of next year’s housing market rebound, the NAR created a list of 10 metropolitan areas that have the most pent-up demand right now. These cities are sleeping giants where home transactions will explode after a dormant stretch.
The NAR put together the list by analyzing 10 factors in the 100 largest US markets, including how much home prices rose in Q3 2023 from the year prior, how many renters in the market can afford to buy, and how many buyers may re-enter the market if mortgage rates fall back to 6.5%. Other considerations included the metro area’s job growth rate, income growth rate, and crime rate.
Each market is below, along with its home price growth in 2023, the share of renters who could afford to buy a median-priced home in the market, the share of returning buyers if mortgage rates fall to 6.5% or lower, and additional commentary from the National Association of Realtors.
Austin, Texas
A street filled with cars in Austin, Texas. — Evan Semones/Getty Images
2023 home price growth: -7.7%
Share of renters who can afford to buy a median-priced home: 18.9%
Share of returning buyers if mortgage rates fall: 5.1%
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.\n\n\”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.\”\n\n2. Dallas, Texas
The Dealey Plaza, Bank of America, and Old Red Museum in Dallas, Texas. — Getty Images
2023 home price growth: 1.9%\nShare of renters who can afford to buy a median-priced home: 21.5%\nShare of returning buyers if mortgage rates fall: 4.9%\nCommentary: \”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.\”\n\n3. Dayton, Ohio
Downtown Dayton, Ohio — Davel5957/Getty Images\n2023 home price growth: 9.1%\nShare of renters who can afford to buy a median-priced home: 30.6%\nShare of returning buyers if mortgage rates fall: 4.7%\nCommentary: \”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.\”\n\n4. Durham/Chapel Hill, North Carolina\nDurham, North Carolina — Sean Pavone/Shutterstock\n2023 home price growth: 2.6%\nShare of renters who can afford to buy a median-priced home: 18.8%\nShare of returning buyers if mortgage rates fall: 5.6%\nCommentary: \”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.\”\n\n5. Harrisburg, Pennsylvania\nHarrisburg, Pennsylvania — Shutterstock/Jon Bilous\n2023 home price growth: 8.5%\nShare of renters who can afford to buy a median-priced home: 32.1%\nShare of returning buyers if mortgage rates fall: 5.3%\nCommentary: \”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.\”\n\n6. Houston, Texas\nAn above-view of downtown Houston, Texas. — Duy Do/Getty Images\n2023 home price growth: 3.7%\nShare of renters who can afford to buy a median-priced home: 23.8%\nShare of returning buyers if mortgage rates fall: 4.3%\nCommentary: \”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.\”\n\n7. Nashville, Tennessee\nNashville, Tennessee — Michael Warren/Getty Images\nNashville, nicknamed “Music City,” is recognized as the country music capital of the world. — Michael Warren/Getty Images\n2023 home price growth: 0.7%\nShare of renters who can afford to buy a median-priced home: 13.8%\nShare of returning buyers if mortgage rates fall: 4.6%\nCommentary: \”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.\”\n\n8. Philadelphia, Pennsylvania\nPhiladelphia, Pennsylvania — joe daniel price/Getty Images\nPhiladelphia is home to a number of historic US landmarks, including Independence Hall, where both the Declaration of Independence and Constitution were signed. — joe daniel price/Getty Images\n2023 home price growth: 4.6%\nShare of renters who can afford to buy a median-priced home: 21.5%\nShare of returning buyers if mortgage rates fall: 4.7%\nCommentary
