Housing Market Forecast: What the Experts Are Saying

Purchasing a home has become more challenging in the last few years because of interest rates and inventory shortages. As the world continues its pandemic and supply chain recovery, the 2024 housing market forecast will shift accordingly. What do the experts say? Here’s a comprehensive guide on what to expect from the real estate market this year. 

What Is the State of the Housing Market?

If you’ve noticed higher housing prices, you’re not imagining things. Real estate prices have dramatically risen since 2020 due to numerous factors, including the pandemic, supply chain disruptions and low inventory. The fourth quarter of 2019 saw an average sale price of $384,600, whereas the end of 2023 saw homes sell for $492,300 on average. While appreciation is standard, the surging costs have left buyers with questions. 

That said, the price depends on where you live. Some markets are more active than others, with many buyers flocking to Sun Belt states and warm-weather areas. 

Georgia, Florida, Texas and other southern states contain popular cities to buy a home because they have retirement neighborhoods, low prices and investment opportunities. You get similar features in northern regions, but warmer South weather has driven a more favorable housing market forecast. 

6 Trends for the 2024 Housing Market Forecast

2024 will be critical for home buyers and sellers as more people try to get into the property game. What trends will you see this year? Experts say these six are ones to watch in the housing market forecast. 

1. Interest Rates 

The most pressing issue for the housing market in 2024 is the interest rates. A fixed-rate mortgage has an interest rate that stays consistent for your entire loan, so buyers try to lock in low rates whenever possible. 

The Federal Reserve raised interest rates multiple times in the last two years to curb inflation, increasing from 0.25% to 5.5% between March 2022 and July 2023. Michael Tilford — a California-based real estate professional and the owner of Tilford Appraisals — says interest rates are the leading factor in the 2024 housing market forecast.

“The housing market in 2024 is at the mercy of interest rates,” Tilford said. “Many homeowners refinanced their homes during the pandemic at record low rates.”

2. Fewer Home Sales

High interest rates keep buyers away from the market because they’re less likely to pay interest rates north of 6% and 7%. On the other hand, sellers are less likely to sell because they purchased their homes when the rates were lower. 

Josiah Carter — a Texas-based real estate professional and the founder of Move Into Fort Worth — says interest rates aren’t likely to drop anytime soon. If the rates stay high, the market will only be even more unaffordable for buyers. 

“Until we see an increase in supply or lower rates, it’s likely that fewer potential sellers will enter the market,” Carter said. “After all, who would want to relinquish their 3 percent rate to purchase something at 7 percent?”

3. Inventory Shortage

Buyers are less likely to enter the market when interest rates are higher. Tilford says the interest rates are responsible for fewer homes available.

“This has caused a huge shortage of inventory in the housing market that won’t be changing any time soon,” Tilford said. “At the same time, there are still a substantial number of buyers looking for homes due to ever increasing cost of rent.”

As Millennials and Gen Zers graduate college and start professional careers, more buyers have entered the housing market. There’s only one problem — the United States is short about 3.2 million homes to meet demand.  

So, what will happen in the meantime? Brady Bridges, the owner of Reside Real Estate in Fort Worth, Texas — says the younger generations will look for alternative means to afford today’s cost of living. 

“Markets with predominantly affordable houses will take a nose dive due to young professionals struggling with inflation, skyrocketing living expenses, and student loans,” Bridges said. “Millennials and Gen Zs are more likely to downsize, rent an apartment, or move in with their parents than try to be a homeowner.”

4. Competitive Luxury Real Estate

While young people struggle, older generations will have more purchasing power because of increased cash assets. Thus, Bridges expects a silver tsunami that makes the luxury real estate market more competitive. 

“The buyers will target residential properties with chic architecture that go over the million mark,” he said. “Scenic coastal Florida and tax-haven Texas will have an influx of elders.

“The lavish gated communities featuring resort-style amenities, management services, and maintenance workers will sell houses faster than regular homes.”

Research shows numerous Florida cities have seen at least a 25% increase in sales price, including Jupiter, Laurderhill and Daytona Beach. For instance, Sunny Isles Beach saw a 106.4% increase, demonstrating the red-hot market in the Sun Belt. 

5. Balanced Market

Despite the rising prices in some markets, the real estate industry should begin stabilization. Mike Wall — a Dayton, Ohio-based real estate professional and CEO of EZ Sell Homebuyers — says to expect a balanced market in 2024 as prices increase more sustainably. This trend favors buyers, so what can sellers do to prepare?

“Sellers will need to be strategic, ensuring their properties are well-prepared for sale to achieve the best possible outcomes,” Wall said. “Overall, 2024 is shaping up to be a year of opportunity for both buyers and sellers, with careful navigation and informed decision-making being key to success in the real estate market.”

6. Possible Warning Signs

Rising housing prices have caused some people to wonder if a crash is in the 2024 housing market forecast. The last time a crash happened was in 2008, leading to multiple years of declining costs before the industry started recovering. If you ask Matt Strickland, a Realtor based in St. John’s, Florida, the current economic conditions are ripe for a repeat.

Strickland’s warning signs include a drop in mortgage application rates and the average monthly purchase index. Plus, he says home-buyer delinquency has increased with credit card defaults even more than during the pandemic.

“A housing market crash happens when the buyers default on their loans and don’t have enough money to invest in real estate,” Strickland said. “The current U.S. housing market is facing both problems.” 

However, not all real estate professionals see the 2024 housing market forecast similarly. Tilford said today’s conditions differ too much from 2008 to cause a repeated catastrophe.

“Those who are predicting a crash are not looking at the whole picture,” he said. “For housing prices to decline significantly, there needs to be a huge influx of inventory, far exceeding what we are currently seeing, which is extremely unlikely in the current environment.”

Previewing the 2024 Housing Market Forecast

A red-hot seller’s market has shown signs of cooling down due to high interest rates and selling prices. However, the outlook for all parties involved in this year’s housing market forecast has changed. What’s going to happen in 2024? Our six experts say interest rates, market stabilization and luxury housing competition are some trends to watch.