Real Estate Market Forecast: Home Prices Expected to Drop in 2024

The real estate market in the United States could be in for a significant shift in 2024, according to a new report from Realtor.com. After two years of soaring home prices and mortgage rates, the firm predicts that home prices will fall by 1.7% next year, with even larger drops expected in 21 of the country’s largest metro areas.

Cities like Austin, Texas, St. Louis, Missouri, and Spokane, Washington are expected to see some of the steepest declines in home prices, with Austin projected to experience a 12.2% drop. This shift in the market could potentially make homeownership more affordable for first-time buyers, but high mortgage rates may still deter some current homeowners from moving.

While the median home price in America dropped slightly in October to $379,100, it is still significantly higher than it was in 2019. The National Association of Realtors reports that the price of a typical home in the U.S. reached $410,200 in June, the second-highest recorded in 24 years.

Looking ahead to 2024, Zillow also predicts that homeowners who purchased their homes when rates were at all-time lows may decide to put their homes up for sale as they wait for historically low rates to return. The average rate for a 30-year fixed mortgage in the U.S. is currently 7.22%, but Realtor.com forecasts that it will drop to an average of 6.8% next year.

Despite the potential for a more stable market in 2024, challenges like low home sales, limited inventory, and a scarcity of move-in ready homes in desirable areas are still expected to persist. However, experts like Realtor.com’s chief economist Danielle Hale and the NAR’s chief economist Lawrence Yun remain cautiously optimistic about the future of the real estate market.