March 1, 2024


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Six experts weigh in on real estate in 2024

Six experts weigh in on real estate in 2024

No other phrase defines the 2023 housing market as much as “mortgage rate lock-in in effect” — a phenomenon that has brought the industry to a standstill, putting downward pressure on everything from inventory levels to home sales.

Pandemic-era mortgage interest rates below 5% 85% of current mortgage holders They are locked to prevent current homeowners from selling their homes and buying others at high interest rates, which peaked at 7.79% in the week ending October 26, according to Freddie Mac.

But will things change this year?

There are signs that market conditions will improve.

Mortgage rates have fallen steadily over the past seven weeks, on average 6.61% for a 30-year fixed mortgagethe week ending December 28.

Lower mortgage rates provided a boost to existing home sales, which grew in November, up 0.8% from October and breaking a streak of five straight monthly declines, according to the National Association of Realtors.

Year over year, sales were down 7.3% (down from 4.12 million in November 2022).

“A notable shift can be expected as mortgage rates decline in recent weeks,” says Lawrence Yun, chief economist at NAR.

The housing shortage will continue

One thing most experts don't expect to see is an end to the shortage of homes for sale.

“However, households will have more options in 2024 starting with an uptick in the construction of single-family homes, complementing the large number of multifamily units currently under construction, the vast majority of which are slated to be rental “homes.” , says Danielle Hale, chief economist at

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The additional inventory of new construction homes and apartments will limit the rise in home and rental prices even as long-term shortages keep prices from sliding too much.

However, as the rapid rise in mortgage rates reduced affordability to record lows, builders responded by slowing production, says Odita Koshy, deputy chief economist at First American.

“Builders can now clear the backlog of homes already under construction. However, even as these homes eventually reach the market, the housing market will likely remain structurally undersupplied.

Home price growth will vary from market to market

Against this backdrop, sales nationwide are expected to see only a modest rise in 2024 compared to the long-term low of 2023. Real estate activity will vary significantly from market to market, and some higher-growth areas are expected to see double-digit increases, according to For hill.

Combined sales activity and prices are expected to be highest in two major market groups. The first is more affordable markets in the Midwest and Northeast such as Toledo, Ohio, and Rochester, New York, Hill says. The second group is in Southern California where lower mortgage rates could help the region recover from a particularly slow 2023.

The median current home price for all housing types in November was $387,600, an increase of 4% from November 2022 ($372,700). All four US regions recorded price increases.

“House prices continue to rise,” Yoon says. “Only a significant rise in supply will mitigate the rise in prices.”

Mortgage rates and affordability

Most experts expect that the average 30-year mortgage rate will range between 6.1% and 7% in the first quarter, then decline over the course of the year.

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“Mortgage rates are likely to remain well above their pandemic-era record lows because financial markets increasingly believe the country will avoid a recession in 2024,” says Darryl Fairweather, chief economist at Redfin. “Mortgage rates will fall to approximately 6.6% by the end of 2024. The gradual decline in rates coupled with the slight decline in prices will provide homebuyers with some much-needed relief.”

Election-year volatility will make mortgage interest rates volatile, so the range of estimates for a 30-year fixed rate will be in the mid-6% range, according to Jeff Taylor, founder and managing director of Mphasis Digital Risk.

At rates of 7.125% and current median home prices, it takes $111,000 and $107,000 of household income to buy newly built homes and existing homes, respectively, with a 5% downturn, Taylor says.

If mortgage rates fall 1% to 6.125% and home prices rise a modest 4% as the FHA projects in 2024, it would take $105,000 and $99,000 to buy newly built and existing homes, respectively, a 5% decline.

Building a new house

With low mortgage interest rates and a persistent housing deficit, Robert Dietz, chief economist for the National Association of Home Builders, expects gains in single-family housing construction in 2024. This will be the first year of increases after declines. In 2022 and 2023.

“Due to the reduction in existing inventory, the proportion of new construction has increased to approximately one-thirdResearch and development “Of total single-family inventory in recent months when it has historically been only 10% to 15%,” Dietz says.

Multifamily construction will see a significant decline. Financing conditions are very tight and nearly one million apartments are under construction, the highest total since 1973.

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The level of remodeling activity will be roughly flat in 2024 compared to 2023. Housing stock is aging and requires reinvestment (the typical U.S. home is about 40 years old).

Swapna Venugopal Ramaswamy is the housing and economics reporter for USA TODAY. You can follow her on Twitter @SwapnaVenugopal and subscribe to the Daily Money newsletter here.