The NAR predicts a strong 2024 US home sales rebound

Falling Mortgage Rates Expected to Drive Recovery After a Challenging 2023

Following a year with a sharp decline in home sales, the National Association of Realtors (NAR) anticipates a robust turnaround in the US housing market for 2024. According to the NAR, home sales are projected to plummet by approximately 18% in 2023, constituting the most substantial drop in at least 15 years. The report attributes this downturn to the impact of historically high mortgage rates, peaking near 7.8% in late October 2023.

Key Points:

  1. Sales Decline Amidst Mortgage Rate Peaks: Despite the decline in home sales, the NAR notes that home prices did not experience a substantial decrease due to limited housing supply. The imbalance between supply and demand elevated sale values, compounding challenges for potential buyers.

  2. Anticipated Recovery in 2024: The NAR predicts a positive shift in the housing market dynamics in 2024. Projections indicate a significant drop in the average 30-year fixed mortgage rate to 6.3%, with expectations that the Federal Reserve will implement interest rate cuts four times during the year, starting in the spring.

  3. Factors Driving the Recovery: Lower mortgage rates are expected to attract more buyers, including those returning after a period of subdued activity. The NAR anticipates that improved affordability will stimulate a resurgence in housing market activity, with a projected 19% increase in new home sales and a 13% growth in existing property sales.

  4. Top 10 Cities Poised for Growth: The NAR identifies ten metropolitan areas with substantial pent-up demand, poised to benefit from the housing market rebound in 2024. These cities are characterised by recent home price growth, the proportion of renters able to afford median-priced homes, and the potential influx of buyers if mortgage rates decrease.

Top 10 Cities Identified by NAR:

Austin, Texas

    • 2023 Home Price Growth: -7.7%

    • Share of Renters Affording Median-Priced Homes: 18.9%

    • Percentage of Returning Buyers if Mortgage Rates Fall: 5.1%

Dallas, Texas

    • 2023 Home Price Growth: 1.9%

    • Share of Renters Affording Median-Priced Homes: 21.5%

    • Share of Returning Buyers if Mortgage Rates Fall: 4.9%

Dayton, Ohio

    • 2023 Home Price Growth: 9.1%

    • Share of Renters Affording Median-Priced Homes: 30.6%

    • Percentage of Returning Buyers if Mortgage Rates Fall: 4.7%

Durham/Chapel Hill, North Carolina

    • 2023 Home Price Growth: 2.6%

    • Share of Renters Affording Median-Priced Homes: 18.8%

    • Percentage of Returning Buyers if Mortgage Rates Fall: 5.6%

Harrisburg, Pennsylvania

    • 2023 Home Price Growth: 8.5%

    • Share of Renters Affording Median-Priced Homes: 32.1%

    • Percentage of Returning Buyers if Mortgage Rates Fall: 5.3%

Houston, Texas

    • 2023 Home Price Growth: 3.7%

    • Share of Renters Affording Median-Priced Homes: 23.8%

    • Percentage of Returning Buyers if Mortgage Rates Fall: 4.3%

Nashville, Tennessee

    • 2023 Home Price Growth: 0.7%

    • Share of Renters Affording Median-Priced Homes: 13.8%

    • Percentage of Returning Buyers if Mortgage Rates Fall: 4.6%

Philadelphia, Pennsylvania

    • 2023 Home Price Growth: 4.6%

    • Share of Renters Affording Median-Priced Homes: 21.5%

    • Percentage of Returning Buyers if Mortgage Rates Fall: 4.7%

Portland, Maine

    • 2023 Home Price Growth: 12.3%

    • Share of Renters Affording Median-Priced Homes: 20.2%

    • Percentage of Returning Buyers if Mortgage Rates Fall: 4.9%

Washington, DC; Arlington/Alexandria, Virginia

  • 2023 Home Price Growth: 3.4%

  • Share of Renters Affording Median-Priced Homes: 15.8%

  • Percentage of Returning Buyers if Mortgage Rates Fall: 4.8%

These cities are identified as having the most pent-up demand, and the NAR expects them to experience a surge in home transactions as the housing market rebounds in 2024.

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