Home price forecasts for 2024: mostly positive
Jan 29, 2024
Over 65% of Americans own homes making housing the largest and most important asset class in the country. Based on what we've seen, the 2024 housing price forecasts by industry experts range from from -1.7% to +4.1%.
Even if you don’t own a home, it’s helpful to know how the real estate market is doing since it’s intertwined with our economy.
Real estate is a popular way to invest because it’s one of the few “investments” that also improves your quality of life (as a home), but it also has the potential to generate income (ie. rental properties), and can offer owners more control than stocks.
Before we go through the 2024 home price forecasts, let's quickly review how 2023 went down.
A look back at real estate in 2023
The first half of 2023 experienced a large drop in prices which you can see in the chart below by the St. Louis Federal Reserve (FRED). The median home price in America was $479,500 at the end of 2022, but then it dropped down to $429,000 for the first quarter of 2023 and $418,500 for the second quarter. During those same time periods, the 30-year mortgage rate went from 6.42% to 6.32% and then up to 6.71% respectively.
FRED has yet to release its fourth quarter figures. But the general consensus seems to be that although the second half experienced an upswing, it wasn’t much to write home about.
The National Association of Realtors (NAR) calculated home prices were up just under 1% last year, while other sources claim 2023 closed up between 2.9-3.2% (Sources: CBS News, Redfin, Freddie Mac, Fast Company 2024). Differences are due to different source inputs and calculation methodologies.
Home price predictions for 2024
Now let’s take a look at what some real estate experts predict is in store for 2024. You can see there’s quite a spread from +5% expected by Goldman to -1.7% by Realtor.com. Combining the eight contributors’ forecasts together, the average comes out to +2.6%.
Redfin, which isn’t included in the above table, is calling for a 1% decrease for 2024, making them a second firm that believes a decline is in store this year. They write, “Home prices will still be out of reach for many Americans, but any break in the affordability crisis is a welcome development nonetheless.”
An overall positive outlook for housing in 2024
With the majority of housing price forecasts positive for 2024, most homeowners will likely experience their home value going up slightly or staying flat. That said, real estate performance can vary from one location to the next. So home prices in certain areas may do better or worse than others just like in any year.
If you’re a current homeowner or are looking to buy your first home, keep in mind that local economics, demographics, supply vs demand, and even the occurrence of natural disasters-or lack thereof-can impact the home prices in your area.
Some reasons that some firms forecasted a positive year for housing in 2024 include:
The Fed has signaled it will cut rates this year with expectations of between three-to-five cuts totally 0.75% to 1.25%
Decreasing mortgage rates make purchasing homes more appealing and affordable for buyers.
Pent-up demand is reaching a point where homebuyers no longer want to keep their lives on hold due to a wedding, new baby, death, or divorce.
Much of the millennial generation (over 72 million Americans) is in family planning mode or already have kids and are ready to own their homes..
Many investors got richer last year thanks to a strong stock market making homeownership more realistic for more people in 2024.
For those who forecasted flat or negative growth, their reasoning is largely due affordability, inflation, and using a different median home price index.
If you’re interested in what some are predicting for the housing market beyond 2024, check out the below forecast model by Goldman Sachs. The firm expects home prices to rise by +3.8% in 2025, +4.9% in 2026, and +4.9% in 2027.
It’s also helpful to know that in the grand scheme of things, the 42-year average for annual home appreciation is roughly 4.9%.
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