FINANCE
What is the forecast for housing prices in 2024 according to experts?
Home ownership has continued to challenge first-time buyers so eyes now turn to potential shifts in the market for the year ahead.
As we approach 2024, potential homebuyers in the United States are keenly watching the housing market for signs of change. After a rollercoaster year in 2023, with soaring mortgage rates and median home prices breaching the $400,000 mark, the question on everyone’s mind is: what does 2024 hold for housing prices? We took a look around at what the experts have been saying.
The first thing to note is that the end of 2023 brought some relief as the average 30-year fixed mortgage rate dipped below 7% for the first time in months, currently standing at 6.67%. This decrease marks a significant shift from the highs experienced earlier in the year. However, this easing in rates hasn’t fully alleviated the challenges for aspiring homeowners, especially first-time buyers. The combination of still-high mortgage rates and home prices, against the backdrop of historically low housing stock, continues to make homeownership a challenging goal. Forbes has provided this handy calculator for you.
Housing market prospects in 2024
Experts predict a mixed bag for the housing market in 2024. While home prices are likely to remain high and may even increase in some markets, there are regions where prices are expected to soften. The Federal Reserve’s recent pause in rate hikes is a positive sign, potentially leading to more stable or even lower mortgage rates. However, affordability challenges persist, with pent-up demand and low inventory keeping prices buoyant.
With mortgage rates having spiked in recent years, mortgage applications plummeted but are now showing signs of recovery. The Mortgage Bankers Association (MBA) projects an increase in mortgage origination volume in 2024, anticipating rates to drift down near 6% by year’s end. Despite this uptick, the housing inventory continues to lag, particularly in entry-level homes, suggesting that supply constraints will remain a significant factor in the housing market.
Existing home sales and buyer sentiment
In a surprising turn, existing-home sales saw a slight increase in late 2023, hinting at a potential market turnaround in 2024. However, home affordability remains a pressing issue. Prices have risen 40% since February 2020, with the high-6% mortgage rates and persistent inflation exacerbating the situation. This has led to an unprecedented number of consumers putting their home-buying plans on hold. Home values can be checked on Zillow.
Stability and foreclosure trends
Despite certain areas experiencing price declines, the likelihood of a housing market crash seems low. Homeowners today generally have positive equity, providing a cushion against market volatility. In terms of foreclosures, while there’s an uptick in activity, experts do not foresee a wave of foreclosures in 2024.
Guidance for potential homebuyers
For those contemplating purchasing a home in 2024, the market presents both challenges and opportunities. Experts advise that buying decisions should, as always, be based on individual circumstances rather than attempts to time the market. Tips for prospective buyers include considering relocation to more affordable markets, preparing finances, and staying informed about market trends.
The housing market in 2024 is shaping up to be complex, with continued high prices and limited inventory. However, the easing of mortgage rates and a potential increase in housing supply offer a ray of hope. For potential buyers, the key will be to navigate these waters with careful planning and a keen eye on market developments.