Housing affordability fell to the lowest level in decades this year as rising mortgage rates failed to put pressure on high house prices.
But is there hope on the horizon for 2024? A new report from real estate experts predicts that both prices and mortgages will fall next year – albeit modestly.
According to the researcher, the trend offered 'green shoots' for first-time buyers, although the market would remain challenging thanks to 'higher for longer' interest rates.
According to Realtor.com's predictionsthe average interest rate on a home loan with a 30-year term will fall to 6.5 percent at the end of next year, compared to 7.22 percent now.
Meanwhile, home prices will decline slightly by 1.7 percent, from $391,300 at the end of 2023 to $384,400 in 2024.
A new report from real estate portal Realtor.com predicts that both prices and mortgages will fall next year – albeit modestly
And the new year will even offer renters some reprieve, as rents are expected to fall 0.2 percent, the report said.
Danielle Hale, chief economist at Realtor.com, said: “We won't see a major break in the gridlock the housing market has seen over the past year, but 2024 will be a small step in the right direction. It will no longer get worse.'
Researchers have also identified the hottest local real estate markets, which are expected to see the biggest sales and price growth over the next twelve months.
Toledo, Ohio, came out on top, with the average home price expected to rise 8.3 percent while sales increase 14 percent. The median home price in Toledo in November was $200,000.
It was followed by Oxnard, California, where prices are expected to rise 3.3 percent while sales rise 18 percent.
Rochester, New York came in third, with prices there expected to rise 10.4 percent. San Diego and Riverside, both in California, ranked fourth and fifth, with home prices expected to rise 5.4 percent and 2 percent, respectively.
The top ten was completed by: Bakersfield, California, Springfield and Worcester, both in Massachusetts, Grand Rapids, Michigan and Los Angeles.
Hale noted that these markets were “more stable” than the rest of the country.
“They haven't seen the big price and sales increases that we've seen in other parts of the country, which is now allowing them to differentiate themselves,” she said.
It comes after an unprecedented three years for the US real estate market.
According to U.S. census data, home prices rose during the pandemic from $329,000 in January 2020 to $433,000 two years later.
Researchers have also identified the hottest local real estate markets, which are expected to see the biggest sales and price growth over the next twelve months.
Home prices rose during the pandemic from $329,000 in January 2020 to $433,000 two years later, according to U.S. census data
Many families were caught up in a so-called 'race for space' as they looked for larger homes and gardens in which to spend the lockdown. A widespread shift to working from home has also separated workers from their city center properties.
But home prices have remained high since then, with the median home price still hovering around $420,000, according to Realtor.com.
This is despite the fact that mortgage payments have soared in response to the Federal Reserve's aggressive campaign to raise interest rates to their current 22-year high.
In November 2021, the average interest rate on a 30-year home loan was 3.10 percent – less than half the current rate of 7.22 percent, data from government-backed lender Freddie Mac shows .
In real terms, this means that someone who bought a €400,000 house two years ago would pay around €1,623 per month for their mortgage. This analysis assumes a 5 percent down payment.
The same buyer today faces monthly payments of $2,585 – more than $1,000 extra.
It's no wonder that home sales fell to an all-time low in October, falling faster than during the 2008 housing crisis.
But prices have been propped up by low housing stock, as the construction of new homes has failed to keep pace with the formation of new households.
Realtor.com predicts that the number of available homes will drop another 14.7 percent next year.
| Subway | Turnover growth 2024 | Price growth 2024 |
|---|---|---|
| Akron, OH | 3.20% | 3.20% |
| Albany-Schenectady-Troy, NY | 1.10% | 3.70% |
| Albuquerque, NM | -4.10% | 5.20% |
| Allentown-Bethlehem et al, PA-NJ | 2.20% | 5.00% |
| Atlanta-Sandy Springs et al, GA | -15.80% | 0.40% |
| Augusta-Richmond County, GA-SC | 5.80% | 1.80% |
| Austin-Round Rock, TX | -11.70% | -12.20% |
| Bakersfield, CA | 13.40% | 2.30% |
| Baltimore-Columbia-Towson, MD | -3.10% | 4.60% |
| Baton Rouge, LA | -20.40% | -5.60% |
| Birmingham-Hoover, AL | -4.90% | -1.50% |
| Boise City, ID | -3.20% | -3.40% |
| Boston-Cambridge-Newton, MA-NH | -0.60% | -0.60% |
| Bridgeport-Stamford-Norwalk, CT | -1.30% | 7.20% |
| Buffalo-Cheektowaga et al., NY | 8.30% | 3.90% |
| Cape Coral-Fort Myers, FL | -3.70% | -2.90% |
| Charleston-North Charleston, SC | -13.20% | 3.70% |
| Charlotte-Concord et al, NC-SC | -22.40% | -0.90% |
| Chattanooga, TN-GA | -3.60% | 2.00% |
| Chicago et al., IL-IN-WI | -9.20% | 1.10% |
| Cincinnati, OH-KY-IN | -3.90% | 4.10% |
| Cleveland-Elyria, OH | -1.20% | 2.80% |
| Colorado Springs, CO | -11.50% | -1.70% |
| Columbia, SC | -12.30% | -1.80% |
| Columbus, OH | -1.70% | 2.20% |
| Dallas-Fort Worth-Arlington, TX | -12.90% | -8.40% |
| Dayton-Kettering, OH | -2.90% | 4.80% |
| Deltona-Daytona Beach et al., FL | -3.70% | -3.10% |
| Denver-Aurora-Lakewood, CO | -15.30% | -5.10% |
| Des Moines-West Des Moines, IA | -5.60% | 9.90% |
| Detroit-Warren-Dearborn, MI | -6.70% | 10.90% |
| Durham-Chapel Hill, NC | -1.50% | 5.80% |
| El Paso, Texas | 6.30% | 4.60% |
| Fresno, CA | -6.00% | -0.30% |
| Grand Rapids-Wyoming, MI | 6.10% | 7.20% |
| Greensboro-High Point, NC | -1.20% | 3.30% |
| Greenville-Anderson-Mauldin, SC | -12.40% | 1.00% |
| Harrisburg-Carlisle, PA | 5.60% | 5.10% |
| Hartford-West Hartford et al., CT | 3.10% | 9.10% |
| Houston-The Woodlands et al, TX | -9.70% | -4.50% |
| Indianapolis-Carmel-Anderson, IN | -7.60% | 6.10% |
| Jacksonville, FL | -5.80% | -0.50% |
| Kansas City, MO-KS | 5.40% | -1.20% |
| Knoxville, TN | -5.90% | 7.20% |
| Lakeland-Winter Haven, FL | 2.90% | -3.50% |
| Lansing-East Lansing, MI | 1.20% | 6.20% |
| Las Vegas-Henderson-Paradise, NV | 11.10% | -2.30% |
| Little Rock et al., AR | 0.40% | 3.10% |
| Los Angeles-Long Beach et al, CA | 9.20% | 3.50% |
| Louisville et al., KY-IN | 9.10% | 1.20% |
| Madison, WI | 3.90% | -1.50% |
| McAllen-Edinburg-Mission, TX | -0.60% | 1.60% |
| Memphis, TN-MS-AR | -10.80% | -4.10% |
| Miami-Fort Lauderdale et al, FL | 3.80% | 5.00% |
| Milwaukee-Waukesha et al, WI | 0.20% | 1.10% |
| Minneapolis et al., MN-WI | -2.40% | -0.90% |
| Nashville-Davidson et al, TN | -11.40% | -4.80% |
| New Haven-Milford, CT | 3.50% | 3.50% |
| New Orleans-Metairie, LA | -1.10% | 3.10% |
| New York-Newark et al., NY-NJ-PA | -10.80% | 3.00% |
| North Port-Sarasota et al., FL | 1.30% | -4.90% |
| Ogden-Clearfield, UT | -15.10% | -3.80% |
| Oklahoma City, OK | 1.90% | 1.60% |
| Omaha-Council Bluffs, NE-IA | 1.10% | 4.50% |
| Orlando-Kissimmee-Sanford, FL | 3.70% | 2.20% |
| Oxnard-Thousand Oaks-Ventura, CA | 18.00% | 3.30% |
| Palm Bay-Melbourne et al, FL | -6.10% | 2.30% |
| Philadelphia et al., PA-NJ-DE-MD | -13.40% | 3.80% |
| Phoenix-Mesa-Scottsdale, AZ | 4.40% | -4.30% |
| Pittsburgh, PA | -8.50% | 6.90% |
| Portland-South Portland, ME | 8.00% | -1.90% |
| Portland-Vancouver et al., OR-WA | -25.60% | -7.40% |
| Providence-Warwick, RI-MA | 3.90% | 3.10% |
| Raleigh, NC | -17.00% | 3.60% |
| Richmond, VA | -11.60% | 3.30% |
| Riverside et al., CA | 13.80% | 2.00% |
| Rochester, NY | 6.20% | 10.40% |
| SacramentoâRoseville et al, CA | 10.30% | -1.30% |
| Salt Lake City, UT | -10.20% | -4.10% |
| San Antonio-New Braunfels, Texas | -10.10% | -9.40% |
| San Diego-Carlsbad, CA | 11.00% | 5.40% |
| San Francisco-Oakland et al, CA | -0.80% | -5.20% |
| San Jose-Sunnyvale et al, CA | -18.50% | 3.10% |
| ScrantonâWilkes-Barre et al, PA | 5.50% | 6.30% |
| Seattle-Tacoma-Bellevue, WA | 3.90% | -1.00% |
| Spokane-Spokane Valley, WA | 3.60% | -10.20% |
| Springfield, MA | 10.50% | 4.20% |
| St. Louis, MO-IL | -2.30% | -11.70% |
| Stockton-Lodi, CA | -5.80% | -3.70% |
| Syracuse, NY | 3.40% | 6.40% |
| Tampa-St. Petersburg et al., FL | -5.30% | 1.20% |
| Toledo, O | 14.00% | 8.30% |
| Tucson, AZ | 2.30% | -1.80% |
| Tulsa, OK | -1.40% | 2.80% |
| Urban Honolulu, Hi | -8.90% | -1.90% |
| Virginia Beach et al., VA-NC | 0.30% | 5.30% |
| Washington et al., DC-VA-MD-WV | -0.80% | 2.60% |
| Wichita, KS | -6.20% | 2.30% |
| Winston Salem, NC | -8.00% | 0.30% |
| Worcester, MA-CT | 9.10% | 4.80% |