Housing Market Outlook for 2024: Insights from Industry Expert
For prospective home buyers seeking respite from the persistent surge in housing prices, the outlook for 2024 presents a nuanced landscape. According to Nick Ron, the founder and CEO of House Buyers of America, while home prices are anticipated to sustain an upward trajectory next year, a deceleration in price growth is on the horizon. Ron envisions an approximate 3 to 4% increase in average home prices across the United States in 2024.
However, Ron underscores that a slowdown in price growth is imminent in 2024, attributing it to a confluence of factors. These include the escalation of interest rates, a rise in the housing supply, a dip in demand, and challenges related to affordability for potential buyers. Despite this deceleration, Ron emphasizes that a nationwide drop in prices is not foreseen. Factors such as mounting construction costs and the economic deceleration resulting from prolonged high interest rates are expected to impact the housing market in the coming year.
Navigating the housing market in 2024 presents challenges for buyers, particularly in terms of locating available homes for sale. Recent data from Realtor.com reveals a 2% decrease in the number of homes actively for sale in October 2023 compared to the previous year. The total count of unsold homes, including those under contract, experienced a 3.7% decline, while newly listed homes saw a 3.2% reduction.
Despite these challenges, there are positive aspects to note. The national median list price saw a decrease to $425,000 in October from $430,000 in September, holding steady in comparison to previous years. Realtor.com attributes this resilience to the scarcity of inventory. Ron anticipates some expansion in housing inventory in 2024 but emphasizes that the national housing shortage will persist through the end of the decade. He attributes this prolonged shortage to the estimated pent-up demand for housing, emphasizing the time it will take for builders to secure suitable land, skilled labor, and materials to address the supply deficit. Ron also suggests that innovation in regulatory technology can play a role in increasing housing supply and expediting new home construction.
Complicating matters for potential homebuyers are the escalating mortgage rates, which add to the concerns of those already dealing with historically high home prices. As of November 9, 2023, the average 30-year fixed mortgage rate in the U.S. stood at 7.50%, marking a 23-year high. Ron predicts that while mortgage rates may slightly decrease in the first half of the next year as the economy decelerates, they will remain elevated. The Federal Reserve is expected to initiate rate reductions in 2024, driven by declining inflation and increasing unemployment. Ron anticipates that rates will persist at levels challenging for affordability, thereby continuing to pose difficulties for both buyers and sellers.
In terms of market dynamics, Ron expects 2024 to be a seller’s market due to the prevailing housing shortage. This projection might lead to a shift in home purchasing strategies, with more buyers pooling resources with friends and family to navigate the challenges posed by rising housing costs and uncertainties associated with renting. As intergenerational households and collaborative home purchases become more prevalent, Ron envisions a transformative trend in the real estate landscape.