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Published: Jan 03, 2024 7 min read
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Olive Burd / Money; Shutterstock

This article is part of Money's new-year checklist — a 10-step guide to crushing your financial goals in 2024 (and beyond). For expert advice on achieving your resolutions, keeping your identity safe from scammers and more, read our cover story.


Here’s a piece of good news for rate-weary buyers: Relief is on the way. After months of turmoil, the housing market should be slightly calmer in 2024.

Although the factors that tanked affordability in 2023 — mainly high mortgage rates and lack of inventory — will still be at play in 2024, no one expects conditions to get any worse for buyers and sellers. In fact, many housing experts believe the new year will be a turning point for real estate: They say home sales should (somewhat) rebound, mortgage rates and prices should move lower, and more sellers will list their homes.

To be sure, these improvements will be gradual, and “housing affordability is still going to be the No. 1 issue for homebuyers,” says Danielle Hale, chief economist at Realtor.com. But slightly lower mortgage rates and prices will help lower the costs of homeownership.

What else can we expect from the 2024 housing market? Here’s what experts predict will happen with mortgage rates, inventory, home prices and sales in the near future.

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Mortgage rates will decrease

Mortgage rates were one of the main obstacles for homebuyers in 2023. After starting the year on a downswing, they quickly turned tail and headed up to two-decade highs, even flirting with 8% at one point.

But rates have eased lower in the last two months. A slowing economy, weakening labor market and steady improvement in the battle against inflation led the Federal Reserve to hold the federal funds rate steady over the past few months and signal the possibility of rate cuts in 2024.

As a result, 10-year Treasury yields and the mortgage rates that follow their movement have dropped. Freddie Mac’s 30-year fixed-rate loan averaged below 7% for the first time since mid-August, and all the experts Money spoke to agree the downward trend will continue in the new year (although it’s not guaranteed).

However, don’t expect a dramatic drop into the 3% or 4% range. As with home sales, there’s a wide range of predictions for how low rates will go.

On the higher end, listing site Zillow expects interest rates to stay between 7% and 7.5% throughout the year. The National Association of Realtors is a little more optimistic, expecting rates to average below 7% by the start of the upcoming spring buying season and end the year at around 6.3%. In contrast, Realtor.com expects rates to end 2024 averaging 6.5%. With mortgage rates averaging 6.61% and trending lower at the end of December, it's looking good for rates to stay below 7% this year.

Inventory will increase

Last year, sellers were loath to list their homes because they didn’t want to give up the low mortgage rates they’d previously locked in. As a result, there weren’t a lot of homes to choose from in 2023.

Thankfully, buyers can expect to see some improvement in the number of homes up for sale in 2024. Overall, inventory could increase by as much as 30% compared to last year, according to Lawrence Yun, chief economist at NAR, with some markets seeing even faster growth.

Skylar Olsen, chief economist at Zillow, says she has noticed in recent research that some homeowners who bought when rates were in the 5% and 6% range have readjusted their expectations around how low rates will go. They “are much less sensitive” to the rate-lock effect, Olsen says, adding that the rate homeowners consider “low enough” to prompt them to sell is increasing.

Home prices will likely stay flat

While there should be some improvement in housing supply and mortgage rates, the dynamics that have kept home prices high will continue.

Inventory is still well below demand. Before the pandemic, the number of active listings on the market averaged over 1 million homes, according to the St. Louis Fed. At the end of November, there were 754,846.

What does this mean for the market? Buyers are competing for fewer available homes, keeping upward pressure on home prices. So, on a national level, prices aren’t going to plummet unless we get a sudden and large influx of listings. Most experts forecast home prices will remain flat or decrease by about 1% in 2024.

That doesn’t mean there won’t be some markets where home prices majorly decline. There are currently a handful of cities where prices have decreased significantly, such as San Francisco and Las Vegas, and there’s a probability more cities will see considerably lower prices — just not on a level that could jeopardize the housing market as a whole.

Home sales will increase

Most housing analysts expect sales to improve this year thanks to improving overall market conditions. But not everyone agrees just how much better it will be.

The most conservative estimate for home sales comes from Realtor.com, which forecasts existing home sales to increase by 0.1% year-over-year, or a jump of about 4 million homes sold. At the opposite end of the spectrum is NAR, which is forecasting sales to increase by 13.5% compared to 2023.

It all goes back to — you guessed it — the hope that mortgage rates will continue to edge lower, which Yun says “will bring out more buyers and may even nudge some sellers to list their homes.”

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