Home Prices Forecast for 2024

Home buyers faced a tough real estate market this year, with home prices continuing their upward march and mortgage rates reaching their highest levels in more than 20 years. Making matters worse, the number of homes available for sale were scarce, which also pushed prices skyward.

The question is whether 2024 will deliver more of the same, or if homebuyers could see some relief next year. Housing experts provided their forecasts for the coming year.

Will home prices keep rising in 2024?

There's some good news on this front, with experts predicting that home prices will be flat to slightly down in 2024.

Prices could fall about 1% or be little changed next year, according to housing experts. That would come after the national median home price reached a high of $410,200 in June, a 14.2% surge since year-start.

To be sure, home prices have eased somewhat since then, with the median price dipping to $379,100 in October — yet that's still higher than at year start and a 40% jump from October 2019, prior to the pandemic.

Real estate prices surged during the pandemic partly due to higher demand from millennials starting their own families as well as baby boomers creating more households after a death or divorce. Low mortgage rates during the first two years of the crisis also spurred buying.

Mortgage rates: Will 2024 bring some relief?

Mortgage rates have been climbing since 2022, when the Federal Reserve began hiking its benchmark rate in an effort to tame the highest inflation in four decades.

By October 2023, the typical rate for a 30-year loan had soared past 8%, after starting the year at 6.4%.

A growing number of economists now believe the Fed is done with rate hikes — and may even start cutting its benchmark rate in response to rapidly cooling inflation. The Fed could start lowering its rate by mid-2024, according to a Bank of America estimate.

That could push mortgage lenders to follow, with rates potentially dropping as low as 6.5% in 2024, predicts Realtor.com.

"I believe we've already reached the peak in terms of interest rates," Lawrence Yun, chief economist at the National Association of Realtors, said. "The question is when are rates going to come down?"

Mortgage rates don't always shadow the Fed's rate decisions, as they tend to track the yield on the 10-year U.S. Treasury note. Investors' expectations for future inflation, global demand for Treasurys and Fed policy can also influence rates on home loans.

Will home inventory increase in 2024?

Now for the bad news: experts don't foresee an improvement next year in the number of available homes for sale.

For that to happen, builders would need to have a booming year, while a tidal wave of homeowners would have to be willing to sell their properties.

Homeowners have been reluctant to sell this year because many of them refinanced or bought their properties during the first two years of the pandemic, when mortgage rates were at historic lows of about 3%.

Even if mortgage rates fall to the 6%-range, many homeowners would still face higher financing costs, experts note. As a result, it's unlikely that a flood of properties will hit the market in 2024, which means inventory could remain tight next year.

Realtor.com expects housing inventory to fall 14% next year, in part because homeowners are likely to stay put. Homeowners will not sell their properties unless they're absolutely forced to, Realtor.com Chief Economist Danielle Hale predicted.

"Moves of necessity — for job changes, family situation changes, and downsizing to a more affordable market — are likely to drive home sales in 2024," Hale said. "Home buyers will continue to seek out markets where they feel like they get the most out of their dollar as they look for homes that better meet their needs."