What’s In Store for the 2024 Housing Market?

Redfin is making predictions for next years’ housing market and a new annual report lays out seven predictions and points of order that buyers and sellers should expect as we move into a new year. 

According to Redfin, all signs point to the market shifting towards buyer's favor, not sellers—for the first time in years—that will hopefully usher in new life to the market as potential homebuyers turn into homeowners. 

The first major prediction made by Redfin is that actual home prices will fall 1% year-over-year-over-during the span of the second and third quarters of 2024, a first since 2012. That’s a favorable shift for buyers: Prices are ending 2023 up around 3% year over year, and the typical homebuyer’s monthly payment is only about $150 shy of its all-time high. Home prices will still be out of reach for many Americans, but any break in the affordability crisis is a welcome development nonetheless. 

The second major prediction Redfin is fielding is that new listings will rise, dropping existing-home prices because supply will rise more than demand. Redfin has recently seen a double-digit annual increase in homeowners contacting Redfin for help selling their home, alongside a small drop in requests from prospective buyers.

Listings will climb from 2023’s record low as the mortgage-rate lock-in effect eases. Nearly all mortgaged homeowners have a rate below the current level. Many are starting to accept that rates won’t drop back to the 3s or 4s anytime soon, and they want to sell before prices fall. Redfin agents report that homeowners in places like South Florida, where prices have soared the last few years, are deciding to cash out on their equity and move to more affordable areas. 

Thirdly, home sales will increase throughout the year ending up at around a 5% increase year-over-year. In the first quarter, existing home sales will be on pace for 4.1 million total in 2024, up from an annual pace of 3.85 million in the fourth quarter of 2023. Sales will continue rising throughout the year; they’ll be on pace for a total of 4.5 million by the fourth quarter. Home sales will speed up throughout 2024 as affordability improves and more homes hit the market. 

Overall, Redfin expects 4.3 million sales in 2024, up 5% year over year. A crucial difference between 2024 and 2023 will be sales gaining momentum throughout the year instead of losing momentum. 

Fourth among the major predictions Redfin is making is that mortgage rates, which are currently at 20-year highs, will flirt with the 7% mark during the first quarter of 2024, then slowly decline throughout the year, falling to about 6.6%. The gradual decline in rates combined with the small dip in prices will bring homebuyers some much-needed relief. 

Mortgage rates are likely to remain well above pandemic-era record lows because financial markets increasingly believe the country will avoid a recession in 2024. The Fed will likely keep interest rates at their current level at the start of the year even though inflation is largely under control. But then they’re likely to cut rates two or three times starting in the summer, which is why mortgage rates will decline as the year goes on. 

Click here to view graphs, charts, and the other three predictions made by Redfin for 2024.