National Association of Realtors chief economist Lawrence Yun predicts 4.71 million existing homes will be sold, the housing market is expected to grow, and Austin, Texas will be the top real estate market to watch in 2024 and beyond. Yun unveiled NAR's forecast during the association's annual year-end "Real Estate Forecast Summit: The Year Ahead."
Yun expects home sales will begin to rise next year by 13.5% compared to 2023, and the median home price will reach $389,500, an increase of 0.9% from this year.
"Metro markets in southern states will likely outperform others due to faster job increases, while markets in the Midwest will experience gains from being in the most affordable region," said Yun.
Rent prices are expected to calm down further in 2024. This will hold down the consumer price index, said Yun. Foreclosure rates will stay at historically low levels in 2024, comprising less than 1% of all mortgages.
Yun forecasts that U.S. GDP will grow by 1.5%, avoiding a recession, with net new job additions slowing to 1.7 million in 2024, compared to 2.7 million in 2023 and 4.8 million in 2022. After eclipsing 8% in late 2023, he expects the 30-year fixed mortgage rate to average 6.3% and that the Fed will cut rates four times, calming inflationary conditions, in response to slower economic activity.
Mortgage interest rates continued to decline last week, dropping to 6.67% from 6.95% the previous week. For a $400,000 home, this would be a monthly mortgage payment of $2,059, and a monthly savings of $242 from when rates were at 7.79% in October.
Yun also foresees 1.48 million housing starts in 2024, including 1.04 million single-family and 440,000 multifamily homes. As home builders ramp up production, more supply will reach the market. In November, single-family home construction rose 18% from the prior month and was up a hefty 42% from one year ago. New home sales have been up this year despite high mortgage rates due to the offer of incentives on buying down interest rates and the long-held business model of offering co-op commission to buyer agents.
"Even more home building will be needed with the housing shortage persisting in most markets. Home price appreciation can only moderate from drastically improved supply. Another 30% rise in home construction can easily be absorbed in the marketplace, especially in light of recent weeks' plunge in mortgage rates," said Yun.
Yun listed the following 10 real estate markets with the most pent-up housing demand that are expected to outperform other metro areas in 2024: 1) Austin-Round Rock-Georgetown, Texas; 2) Dallas-Fort Worth-Arlington, Texas; 3) Dayton-Kettering, Ohio; 3) Durham-Chapel Hill, North Carolina; 5) Harrisburg-Carlisle, Pennsylvania; 6) Houston-The Woodlands-Sugar Land, Texas; 7) Nashville-Davidson-Murfreesboro-Franklin, Tennessee; 8) Philadelphia-Camden-Wilmington, Pennsylvania-New Jersey-Delaware-Maryland; 9) Portland-South Portland, Maine; and 10) Washington-Arlington-Alexandria, D.C.-Virginia-Maryland-West Virginia.
"The demand for housing will recover from falling mortgage rates and rising income," said Yun. "In addition, housing inventory is expected to rise by around 30% as more sellers begin to list after delaying selling over the past two years. The selected top 10 U.S. markets will experience faster recovery in home sales."
NAR selected these 10 real estate markets based on the following economic indicators: 1) more "returning" buyers; 2) lower home price appreciation; 3) more renters who can afford to buy the median-priced home; 4) more potential sellers; 5) a larger decrease in remote workers; 6) more affordable listings for first-time buyers; 7) stronger job growth; 8) faster income growth; 9) most high-earner millennial renters moving into the area; and 10) lower violent crime rate.
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