Here's how far house prices and mortgage rates could fall in 2024 (2024)

The new year may finally bring good news for homebuyers – or at least the start of improved housing affordability.

Historically highinterest on mortgage loansand the home prices that held back homebuyers this year are expected to decline slightly in 2024, according to real estate company Realtor.com.housing market forecast. While homebuyers shouldn't expect major relief from the current crushing costs of home ownership, small improvements in affordability are expected to help some buyers get their foot in the door.

Tenants can also look forward to some better conditions when new construction comes onto the market in the coming months.

What will the housing market look like in 2024?

The year 2023 proved to be a tough one for homebuyers thanks to persistently high prices and rising interest rates, leaving many current homeowners trapped in their current mortgages. Floatinghome insuranceCosts throughout 2023 also worsened the outlook for buyers, many of whom were forced to delay purchases or pull out of deals.

With inflation slowing, mortgage rates are expected to fall in 2024. But the wheels of progress turn slowly: experts at Realtor.com predict that interest rates will average 6.8% in 2024 and 6.5% by the end of the year. (For comparison, the average mortgage rate between 2013 and 2019 was around 4%, peaking at 7.79% earlier this year.)

As for home prices, Realtor.com expects the typical monthly purchase cost of the median-priced home list to drop slightly from this year's $2,240 to $2,200, which represents about 35% of the median U.S. household income. Demand is likely to remain low and inventory will still be limited as potential sellers hold back.

“Necessary steps — for job changes, changes in family situations and downsizing to a more affordable market — are likely to boost home sales in 2024,” Danielle Hale, chief economist at Realtor.com, said in the report.

While Realtor.com expects record unaffordability to decline, Americans should not expect a return to pre-inflation, pre-pandemic norms in 2024. And if inflation picks up again, home sales could suffer even more and fuel eventual market stabilization. .

However, there is a bright spot for tenants in 2024: more new construction is expected to come onto the market and tenants will have more choices. That said, the fact that renting will still be more affordable than buying will also lead to more competition in the rental space. Realtor.com doesn't expect rents to rise much; the average rent for 2024 is expected to fall only about 0.2% below this year's.

What can help homebuyers in 2024?

While affordability will still be a challenge in the near future, free tools are one of themcalculates for the payment of mortgage loanscan help potential buyers find the best options for their loan, down payment, and home price needs. Discover different loan products withmortgage credit institutionscan also help buyers find lower prices or less stringent loan requirements.

Although the average payout reached a record high of $30,000 this year, it is estimated that more than 2,000assistance with payment(or DPA) programs available nationwide. DPA programs can be especially beneficial for first-time homebuyers and are typically designed to meet the needs of local homebuyers.

Homebuyers can start by researching data protection authorities in the desired state, province and city and contacting providers about their qualification requirements. By working with a housing counselor, which each lender has available, buyers can explore the programs that are best for them.

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