The past few years have been a roller coaster ride for the real estate industry. From the post-pandemic buying boom to high interest rates this past year, many are wondering if housing prices and inventory will stabilize in 2024.

Of course, no one has a crystal ball to peer into the future with complete certainty, but the National Association of REALTORS® (NAR) and the mortgage lending powerhouse Fannie Mae have made some predictions about what to expect from the real estate market in 2024.

Housing Availability Projections for 2024

Will it be easier to buy a house next year?

While limited inventory in 2021 and 2022 resulted in soaring home prices and unprecedented bidding wars, the market has shown signs of stabilizing throughout 2023. Fannie Mae anticipates slow and steady growth in the 2024 housing market without any major price leaps or inventory changes.

However, the NAR and other mortgage lenders still anticipate limited inventory heading into next year. Unfortunately, the real estate industry continues to experience the ramifications of previous years when shortages in labor, materials, and land development first failed to keep up with demand.

The Mortgage Rate Lock-in Effect

Homeowners who locked in a 2 or 3% interest rate post-pandemic are feeling less incentivization to sell and take out a new mortgage at 8%. This dilemma has been called the mortgage rate lock-in effect and is another contributing factor to limited housing inventory.

Housing Affordability Projections for 2024

Will house prices go down next year?

Probably not. While prices may not rise as quickly as they have been, they will likely still increase. Remember, supply and demand drive prices; unfortunately, there doesn’t seem to be enough inventory to lower prices yet.

Prospective buyers—particularly first-time buyers—have an even greater hurdle to overcome in achieving financing. Inflation has made saving for a downpayment more difficult for most households. For homebuyers who want to relocate or purchase a larger home, it may be more difficult to secure lending.                

Real Estate Interest Rate Projections in 2024

Will interest rates drop next year?

Over the past year—and particularly the past six months—household budgets have felt the strain of inflation on everything from groceries to vehicles to homes. The Federal Reserve hiked interest rates to combat inflation and stabilize prices across the board.

The good news is that inflation rates are beginning to slow, so the Federal Reserve is expected to loosen its grip and lower interest rates. However, they likely won’t decrease very much, and maybe not at all until later in 2024.

2024 Housing Market Projection Summary

In summary, many predictions indicate that the housing market at the beginning of 2024 will likely feel the same as in 2023. Low inventory and high-interest rates are expected to hinder exceptional economic growth. However, as inflation stabilizes, interest rates should start dropping and attracting hesitant buyers back into house shopping.

Home prices may increase, though not as drastically as they did from 2021 to 2023. Limited inventory is expected to continue contributing to higher prices.

Overall, most experts expect slow and steady growth as the market continues stabilizing.

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