Housing market predictions for 2024

Key takeaways

Low levels of inventory mean that sellers continue to have the upper hand in the housing market. Mortgage rates have come down from their peak but are still high, and steep home prices are dissuading would-be buyers. If rates were to drop further, that would spur the market for both buyers and sellers.

With home prices historically high, inventory still very tight and big commission changes potentially coming mid-year, many prospective sellers and hopeful buyers are feeling nervous about today’s housing market.

The median sale price for an existing home in the U.S. was $384,500 as of February 2024, the the highest February median on record with the National Association of Realtors (NAR). And after rising above 8 percent in October, the average 30-year mortgage rate as of early April 2024 was 7.05 percent — a welcome decrease but still much higher than most homeowners’ locked-in rates.

Home prices, mortgage rates, inventory levels and commission structures will all shape housing affordability in the coming year. Curious where these trends may go? Read on to learn what the experts predict for the 2024 housing market.

What will happen to the housing market in 2024?

Rates roughly doubled back in 2022, thanks in part to the Federal Reserve’s war on inflation, and they have stayed high since. While the Fed does not directly set mortgage rates, mortgage lenders take cues from them, and mortgage rates climbed in tandem with the Fed’s long string of rate hikes.

Mortgage rates should trend lower throughout the year as inflation pressures ease and the Fed begins to cut short-term interest rates. — Greg McBride, Bankrate Chief Financial Analyst

The Fed held rates steady in its first two meetings of 2024, and has signaled that rate cuts, rather than hikes, could be coming in the near future. But many predict that homebuyers will still be feeling the squeeze throughout the year. “Mortgage rates should trend lower throughout the year as inflation pressures ease and the Fed begins to cut short-term interest rates, but rates may not dip below 6 percent until late in the year,” says Greg McBride, CFA, chief financial analyst for Bankrate. “A sharp economic slowdown would bring mortgage rates materially lower than that — but be careful what you wish for.”

Key housing market stats
The median home-sale price as of February 2024 was $384,500, up 5.7 percent from one year ago, according to NAR data.The nation had a 2.9-month supply of housing inventory as of February, per NAR, which is low enough to be considered a seller’s market.Home-price growth increased in January 2024 by 6 percent, according to S&P CoreLogic’s latest Case-Shiller Index. That’s the fastest annual growth since 2022.Bankrate’s latest national survey of large lenders shows the average rate on a 30-year mortgage was 7.05 percent as of April 3, 2024.The U.S. inflation rate as of February 2024 was 3.2 percent — still higher than the Fed’s stated goal of 2 percent.

Looming commission changes

One thing to keep an eye on this summer: Thanks to the settlement of a major federal lawsuit, the way real estate commissions work in the U.S. is set to change in July (pending court approval). The longstanding structure has been for home sellers to pay both their own agent’s commission and their buyer’s, often with that cost “baked into” the home’s asking price. But going forward, buyers may have to cover their own agent’s commission fee.

How this might affect home prices and affordability remains to be seen. “The new rules mean buyers will have a say in how much they pay buy-side agents. Aside from that, it’s hard to know exactly how the changes will affect the housing market or the purchase process,” says Bankrate prinicipal writer Jeff Ostrowski. “Will commissions fall? Will buyers decide to do it themselves, without using buyers’ agents? It could be years before we know the answers.”

Will housing sales decline?

While home prices more than held firm in 2023, the volume of home sales softened considerably. That has continued so far in 2024: Existing-home sales in February were up 9.5 percent over January, but that still represented a 3.3 percent drop year-over-year. However, these trends may pivot if mortgage rates continue to dip.

“Housing demand has been on a steady rise due to population and job growth, though the actual timing of purchases will be determined by prevailing mortgage rates and wider inventory choices,” said NAR chief economist Lawrence Yun in the association’s most recent Existing-Home Sales report. NAR forecasts that sales will rise by 13 percent in 2024.

“Housing sales are expected to increase a bit from this year,” agrees Chen Zhao, who leads the economics team at Redfin. “However,” she qualifies, “we are not expecting sales to increase dramatically, as rates are likely to remain above 6 percent.”

“Lower mortgage rates would help spur home sales activity, which are expected to increase in 2024 compared to 2023,” says Selma Hepp, chief economist at CoreLogic. “Declines in mortgage rates will drive more sellers to trade their existing home and help add much-needed inventory to the market, leading to more transactions.”

Will housing inventory increase?

Speaking of much-needed inventory, housing supply remains very low. The overall number of existing homes on the market for sale as of February sat at 1.07 million units, up both month-over-month and year-over-year. Even so, that represents only a 2.9-month supply, far short of the 5 to 6 months usually needed for a balanced market.

More supply is clearly needed. — Lawrence Yun, Chief Economist, National Association of Realtors

“More supply is clearly needed to help stabilize home prices and get more Americans moving to their next residences,” Yun said.

For inventory levels to improve significantly, there would need to be either a surge of homeowners listing their existing properties or a huge amount of new-construction homes hitting the market. While both seem relatively unlikely, Yun does foresee some increase in housing inventory for 2024: “There will be a steady rise in inventory from recent growth in home building,” he said in NAR’s most recent Pending Home Sales analysis. “Additionally, many sellers, who delayed listing in the past two years, will begin to put their homes on the market to move to a different home that better fits their new life circumstances — such as changes in family composition, jobs, commuting patterns and retirees wanting to be closer to their grandkids.”

Will home prices go down?

Housing prices have been on fire lately, culminating in historic highs — February’s median of $384,500 was only about $29K short of the highest monthly home price NAR has ever recorded ($413,800, set in June 2022).

So will home prices drop in 2024? Probably not, Yun said in December: “Home price appreciation can only moderate from drastically improved supply. Another 30 percent rise in home construction can easily be absorbed in the marketplace.” In the final Pending Home Sales report of last year, NAR predicted median home prices to rise 1.4 percent to to $395,100 in 2024, and then another 2.6 percent to $405,200 in 2025.

Zhao also noted that prices are intricately connected with housing inventory. “Sellers are likely to remain reluctant to give up their low interest rate for a much higher one, so inventory will remain constrained,” she says. “As more time passes, more homeowners may be ‘forced’ to sell due to life events, so inventory may rise from the current anemic levels, but it’s unlikely to increase much. That means that prices are unlikely to fall on a year-over-year basis, unless demand falters.”

Will 2024 be a buyer’s or seller’s market?

In today’s market, tight inventory continues to give sellers the upper hand. There are more buyers than there are homes available, so each home that comes on the market becomes more of a hot commodity than it might if there were more options to choose from. Without a significant uptick in inventory, the seller’s market seems unlikely to change this year.

“The current significant shortage of inventory suggests it would be hard to [become] a buyer’s market anytime soon,” says Hepp.

“Given expectations about interest rates and supply, demand will probably exceed supply similar to current conditions,” Zhao says. “Supply is likely to remain below what we would deem a balanced market.”

Buyers should be wary of biting off more than can be financially chewed. — Greg McBride, Bankrate Chief Financial Analyst

“The plague of low inventory won’t be cured in the short-term, but a retreat in mortgage rates could prompt a few more sellers to put their homes on the market,” says McBride. “There are still more buyers than sellers in many markets, but there will be better balance this year than last. Buyers should be wary of biting off more than can be financially chewed. Home prices are at record highs in most markets, and insurance costs are up substantially in many coastal areas. You’re not getting a bargain, and the willingness to walk away might prove to be a good choice.”

Bottom line on the 2024 housing market

The combination of high mortgage rates, steep home prices and low inventory levels are lining up to make the 2024 housing market a challenging one for both buyers and sellers. But rates have cooled a bit — if that continues throughout the year, as some experts predict, then market activity should heat up in response.

The complexities of the current conditions mean that, now more than ever, it’s smart to lean on the guidance of an experienced local real estate agent. If you want to enter the market in 2024, whether as a buyer or a seller, let a pro lead the way for you.


Maybe, but probably not significantly. Experts predict that higher rates will likely persist in 2024 — though hopefully, after surpassing 8 percent in October 2023, the worst is behind us. “I believe we’ve already reached the peak in terms of interest rates,” NAR chief economist Lawrence Yun said at the company’s NXT conference in late 2023. He told the audience he expects rates to range between 6 and 7 percent by spring buying season. As of early April, Bankrate data showed the 30-year mortgage rate was averaging just above that predicted range at 7.05 percent.

No — experts do not think there is a housing market crash looming in 2024. Lending standards are much more strict now than they were before the Great Recession, and with low inventory and high demand both continuing, the housing market is not likely to enter a recession in the coming year.

Many prospective homebuyers chose to wait things out in 2023, in the hopes that 2024 would bring a more advantageous market. But so far, with mortgage interest rates still relatively high and housing inventory stubbornly low, it looks like 2024 will remain a challenging time to buy a house. If rates continue to go down, though, that would alter the landscape — not only would it make the purchase more affordable for buyers, but homeowners locked into their previous lower rates might finally choose to sell, which would add much-needed inventory to the market.

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