Housing prices could tumble in 2024, according to a forecast from Realtor.com. Twenty cities in particular are expected to see significant drops in housing prices in the coming year.
After years of skyrocketing home prices, major U.S. cities are anticipating a reversal, with home prices forecasted to fall in the coming year, according to the new Realtor.com report.
Among the 37 cities analyzed in Realtor's report, these 20 are forecasted to see the steepest declines in home prices next year.
Austin, Texas, is expected to see the steepest drop in home prices, with a 12.2 percent decline anticipated. St. Louis, Missouri, will see housing prices fall 11.7 percent and Washington's housing prices will fall about 10.2 percent in 2024, according to Realtor.com.
The projected shift in the housing prices is part of a broader trend influenced by several factors, Realtor said in its report, including elevated mortgage rates, changes in buyer behavior and the evolving economic climate. Affordability becomes a more pressing concern, and the impact is expected to be felt across various sectors of the housing market, from existing home sales to new construction, signaling a shift in the dynamics of buying, selling and renting.
Homeowners Hesitate to Sell
The report also highlights a likely continuation of the "lock-in effect," where existing homeowners, benefiting from lower mortgage rates secured in previous years, are disinclined to sell, contributing to a persistently low supply of homes for sale. The trend, coupled with the affordability challenges posed by high mortgage rates, is expected to keep home sales at relatively low levels, with a slight increase of 0.1 percent projected for 2024.
Modest economic growth, slightly higher unemployment, and easing inflation are setting the stage for a slow retreat in longer-term interest rates, including mortgage rates, according to Realtor.com's 2024 Housing Market Forecast. Realtor said those factors could improve housing affordability but also dampen the urgency that has characterized home shopping in recent years.
Median Existing Home Price Will Fall
The report projects an overall 1.7 percent dip in existing home median price appreciation for 2024, contrasting with the 10.3 percent growth seen in 2022. The median home price in the U.S. as of the third quarter was $431,000, according to the Federal Reserve Bank of St. Louis, meaning a 1.7 percent slip in value would price the median sized home at $423,673 next year.
The homebuying landscape for first-time buyers remains challenging, according to Realtor. Despite some positive signs, like the decline in the percentage of income required to purchase a median-priced home, obstacles like high down payments and overall costs persist.
The rental market, meanwhile, presents a slightly different picture, Newsweek reported Wednesday. After a period of steep rent increases, a mild decline in median asking rents is expected, driven by a surplus in new multi-family supply. It could provide some relief for renters, although the market is still tipped in favor of renting over buying in most areas.
Key wildcards, including mortgage rates, geopolitical instability and domestic political shifts, add layers of unpredictability to the forecasts, Realtor noted in its report. The company shared with Newsweek that its home pricing predictions for next year rely on a "model-based forecast [that] uses data on the housing market and overall economy to estimate values for these variables in the year ahead."
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About the writer
Aj Fabino is a Newsweek reporter based in Chicago. His focus is reporting on Economy & Finance. Aj joined Newsweek ... Read more
