2024 Housing Market Outlook

By Lisa Sturtevant, PhD, Chief Economist, Bright MLS 

At the end of last year, most housing economists were bullish on the 2024 housing market. The general consensus was that mortgage rates were going to fall, pent-up demand would be unleashed, and inventory would continue to shrink as homeowners remained “locked in” to low mortgage rates. 

Here we are, halfway through 2024, and mortgage rates are still sitting close to 7%, homebuyers are increasingly sidelined by these elevated rates, and new listings are on the rise as changing family and financial circumstances compel more people to sell.  

A Mid-Year Reality Check  

The 2024 housing market is shaping up a little differently than we thought it would. The underlying fundamentals of the market are still solid, but record high home prices and 7% mortgage rates have created affordability challenges, particularly for first-time and moderate-income buyers. There is still pent-up demand for homeownership, but more buyers are having to sit out because they cannot afford the price tag. 

A surprising boon to buyers who remain in the market is the increase in the number of homes available for sale. While there will be more options available, in many markets, inventory is still going to remain below pre-pandemic levels and it will still be a seller’s market. As a result, there is no reason to expect major home price declines, though there will be slower home price growth and price drops in some markets in the second half of 2024. 

2024 Housing Market Forecast – By the Numbers

• Mortgage rates will come down slowly, landing at 6.4% by the fourth quarter of 2024. 
  
  
• In 2024, the forecast is for 4.16 million home salesin the U.S., up 1.7% compared to the 30-year low last year but still below the long-term average number of transactions. 
  
  
• The U.S. median home price is expected to increase by 2.0% year-over year. However, some markets where demand has weakened and inventory has increased substantially could see year-over-year declines in the median home price. 
  
  
• At the end of 2024, the forecast is for there to be 1.128 million homes available for saleacross the U.S., a 13.9% increase from 2023.  

U.S. Housing Market Forecast

pp = percentage points

Wildcards 

In 2024, the trend will be toward a more balanced housing market. But that does not mean there won’t be bumps along the way. If we’ve learned anything from the past few years, it's to expect the unexpected. So, what are the wildcards that could impact the housing market over the next six months? 

• The Presidential election.While housing is a top issue for voters, it has not been a major issue so far in the campaigns. Policy differences between the two candidates are unlikely to have a major impact on the housing market. However, a chaotic election could dampen consumer confidence and cool buyer demand. 
  
  

• Mortgage rates.Right now, it’s possible the Federal Reserve will only cut interest rates once in 2024. That decision, however, is data dependent. If inflation drops significantly or the labor market cools considerably, we could see more and deeper rate cuts, which could bring mortgage rates down faster.
  
  
• Immigration.Policy related to immigration could have important implications for both the demand and supply sides of the housing market. In the case of immigration, presidential policies could actually influence housing market outcomes. More immigrants coming into the country means more demand for housing, but also generally means more workers in the construction industry. A crackdown on immigration could dampen both housing demand and new construction, slowing overall market activity.