(NEXSTAR) – After two years of surging U.S. home prices and mortgage rates, some relief could be coming to the real estate market in 2024, according to a new report from Realtor.com.
Overall, the real estate firm predicts home prices will fall 1.7% next year, though larger drops are anticipated in 21 of the country’s largest metro areas that Realtor.com analyzed in its forecast.
Austin, Texas, could see the steepest decline, with a 12.2% drop expected. Three other cities in the Lone Star State could see falling home prices, including San Antonio, Dallas and Houston.
Here’s the full list:
Metro areaProjected decline in home prices (%)Austin, Texas-12.2St. Louis, Missouri-11.7Spokane, Washington-10.2San Antonio, Texas-9.4Dallas, Texas-8.4Portland, Washington-7.4Baton Rouge, Louisiana-5.6San Francisco, California-5.2Denver, Colorado-5.1Sarasota, Florida-4.9Nashville, Tennessee-4.8Houston, Texas-4.5Phoenix, Arizona-4.3Salt Lake City, Utah-4.1Memphis, Tennessee-4.1Ogden, Utah-3.8Stockton, California-3.7Lakeland, Florida-3.5Boise City, Idaho-3.4Cape Coral, Florida-2.9Source: Realtor.com
According to the National Association of Realtors (NAR), the price of a typical home in America skyrocketed to $410,200 in June, the second-highest recorded in 24 years. The median price cooled this October, dropping to $379,100, but that’s still 40% higher than in October 2019.
Realtor said the shift in housing affordability might inspire some first-time buyers to enter the market, but high mortgage rates could deter some current homeowners from moving.
Meanwhile, Zillow said in its 2024 outlook that it expects homeowners who got in when rates were at all-time lows to put their homes up for sale as they “grow weary waiting for the historically low rates of 2021 to return.”
The average rate for a 30-year fixed mortgage in the U.S. is 7.22% as of November, the Associated Press reported Thursday, citing mortgage buyer Freddie Mac. Realtor.com predicts that will drop to an average of 6.8% next year.
“We’re not going to see a major breakthrough in the logjam that has been the housing market over the last year or so, but 2024 will be a baby step in the right direction,” Realtor.com’s chief economist Danielle Hale said. “It’s going to stop getting worse.”
Similarly, Lawrence Yun, the NAR’s chief economist believes interest rates will fall between 6% and 7% by the spring.
Even though the market might stabilize next year, Realtor.com still expects challenges — like low home sales, limited inventory, and the scarcity of move-in ready homes in desirable areas.
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