Mortgage Rates and Home Prices: Predictions for 2024
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The new year could finally bring good tidings for homebuyers — or at least the beginning of improved housing affordability.
Historically high mortgage rates and housing prices that stymied homebuyers this year are expected to ebb a bit in 2024, according to real estate brokerage Realtor.com’s housing market forecast. While home shoppers shouldn’t expect major relief from today’s crushing homeownership costs, small gains in affordability are expected to help some buyers get a foot in the door.
Renters can also look forward to somewhat better conditions as new construction hits the market in the coming months.
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Interest rate estimates for:
Poor/Fair Credit
6.25% – 8.96%
Good/Very Good Credit
6.26% – 8.65%
Exceptional Credit
6.26% – 7.51%
What will the housing market look like in 2024?
The year 2023 was a rough one for homebuyers thanks to stubbornly high prices and rising interest rates, which kept many current homeowners locked into their current mortgages. Soaring home insurance costs throughout 2023 also worsened the outlook for buyers, many of whom were forced to hold back on making a purchase or back out of deals.
Now that inflation is easing, mortgage rates are expected to decline throughout 2024. But the wheels of progress turn slowly: Realtor.com experts are forecasting that rates will be 6.8% on average for 2024 and 6.5% by the year’s end. (For comparison, the average mortgage rate between 2013 and 2019 was about 4%, and they reached a high of 7.79% earlier this year.)
As for home prices, Realtor.com expects the typical monthly purchase cost for the median priced home listing to drop slightly from this year’s $2,240 to $2,200, amounting to about 35% of the average U.S. household income. Demand will probably remain low, and inventory will still be limited as would-be sellers hold back.
“Moves of necessity — for job changes, family situation changes, and downsizing to a more affordable market — are likely to drive home sales in 2024,” Danielle Hale, Realtor.com’s chief economist, said in the report.
On the whole, while Realtor.com expects record-high unaffordability to wane, Americans shouldn’t anticipate a return to pre-inflation, pre-pandemic norms in 2024. And if inflation ticks…
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