US Housing Market Forecast 2024: Navigating Trends and Opportunities
The US housing market has been a focal point of economic discussions, with its trends and fluctuations serving as key indicators of the nation’s overall financial health. As we approach 2024, it’s essential to analyze current market conditions and make informed predictions about what lies ahead for homebuyers, sellers, and investors.
Continued Demand Amidst Supply Challenges:
One of the defining features of the US housing market in recent years has been a persistent demand for homes. Low-interest rates, a growing population, and a strong job market have contributed to this trend. However, the supply side of the equation has struggled to keep up. A shortage of available homes has led to increased competition among buyers, driving up prices.
In 2024, this demand is likely to persist, driven by a combination of demographic factors, economic growth, and the ongoing trend of remote work. Millennials, the largest demographic group in the US, are reaching the age where homeownership becomes a priority, further fueling demand.
Rising Interest Rates:
While low-interest rates have been a significant driver of the housing market in recent years, there is a growing consensus that interest rates will rise in the coming years. The Federal Reserve may adjust rates in response to inflation concerns or other economic factors. A gradual increase in interest rates could impact affordability for some buyers, potentially slowing down the pace of home price appreciation.
Homebuyers and investors should be mindful of this trend and consider locking in favorable mortgage rates sooner rather than later.
The US housing market is not a monolithic entity; rather, it consists of regional markets with distinct characteristics. While some areas may continue to experience robust growth, others might face challenges. Factors such as job growth, migration patterns, and local economic conditions play a crucial role in shaping regional housing markets.
Metropolitan areas that have seen significant population influx due to remote work opportunities may continue to experience high demand, while certain urban centers could face challenges as remote work becomes more normalized.
Technology and Real Estate:
Advancements in technology continue to reshape the real estate landscape. Virtual tours, digital transactions, and AI-driven analytics have become integral parts of the home buying and selling process. As technology continues to evolve, it will likely play an even more prominent role in shaping the future of the housing market.
Investors and real estate professionals should stay attuned to technological advancements, as they can provide a competitive edge in understanding market dynamics and making informed decisions.
Government policies, particularly those related to housing and finance, can have a significant impact on the real estate market. Changes in regulations, tax policies, or initiatives to address housing affordability may influence market trends. Keeping a close eye on legislative developments at both the federal and state levels will be crucial for those involved in the real estate sector.
In the next five years, here’s what some experts predict will happen in the housing market. Zillow reports that the average value of a home in the United States is $355,852. Based on seasonally adjusted data, this value is calculated for only the middle tier of home prices. Typical home values in July 2021 were $300,000. Home values in the United States have risen 18.2% over the past year and are expected to continue rising slowly.
In July, the median home value in the country fell 0.1% from June, the first monthly decline since 2012. Monthly growth from April’s peak of 1.9% has slowed from July’s 0.1% fall. As part of its forecast, they now incorporate the percentage of for-sale listings that receive price cuts. The share of sellers has increased as a result of changing market conditions. In addition, weaker home sales forecasts contribute to lower home value estimates.
Slow house sales are typically caused by a weak consumer mood. A slowdown in the economy would also reduce house purchases if interest rates rise quickly. The latest economic data sent mixed signals, which are factored into forecasts. In July, job growth and unemployment rates exceeded expectations.
With decreasing competition and more sellers cutting their prices, bidding wars are fading. There won’t be any improvement for those priced out anytime soon. Price declines should bring demand back into the market, as inventory levels stabilize much lower than they were before the pandemic.
Housing Market Forecast 2024 and 2025
- It is expected that housing inventory will reach pre-pandemic levels by the end of 2024, according to the majority of panel members.
- It is expected that first-time buyers will remain below 2019 levels until 2024.
- A majority of respondents predicted that prices will grow by 46.5 percent between now and 2026, while the most conservative group predicted only 10.3 percent growth.
- According to the average response, there will be a total increase of 26.8% by the end of 2026, or a compound annual growth rate of 4.9 percent.
The pandemic caused record-breaking price increases and rent increases, making saving for down payments difficult. In 2021, the percentage of first-time home buyers fell from 45 percent in 2019 to 37 percent, according to a Zillow survey. In the next two years, first-time buyers will regain their pre-pandemic market share, with 26 percent predicting 2024 and 25 percent predicting 2025.
Millennials, the largest generation in American history who will be well into their prime home-buying years far before 2030, predict first-time buyers will not reach 45% until after 2030. U.S. buyers are on average 43 years old, but the median (43 years old) is higher (45 years old). One in five buyers (17%) is in their twenties or younger, while a quarter (23%) is in their sixties or older. In other words, the age distribution of buyers in the U.S. represents a sort of middle ground.
The average tenured homeowner (one who hasn’t moved in a year) is typically younger, while the average renter is older. Household incomes of buyers tend to be higher than those of the general U.S. population. Median household income among buyers is approximately $86,000, compared to $65,700 for the overall national median (2019).
From now until the end of 2026, respondents who were most optimistic predicted a 46.1 percent increase in prices, while those who were most conservative predicted a 9.3 percent increase. It is expected that the total increase by 2026 will be 26.4 percent.
Where Will Home Prices Rise the Most in 2024?
According to Moody’s Analytics, home prices will increase by zero percent in 2023, a dramatic decrease from the 19.7 percent price growth the housing market experienced over the past year. Fortune magazine contacted Moody’s Analytics for a copy of its latest proprietary housing analysis. Analysts anticipate that price changes will vary significantly between regions of the country.
Between the fourth quarter of 2022 and the fourth quarter of 2024, financial intelligence firm calculated how home prices will shift in 414 regional housing markets. Based on Moody’s Analytics’ forecast model, 210 of the nation’s 414 largest housing markets will see home prices decline in the next two years, while 204 will see them rise.
These cities are expected to report the biggest rise in home prices in 2024:
- Albany, Georgia (5.5 percent)
- Casper, Wyoming (4.52 percent)
- Columbus, Georgia (4.09 percent)
- Rocky Mount, North Carolina (3.97 percent)
- San Jose, California (3.83 percent)
The US housing market in 2024 is poised for continued activity, driven by a combination of demand, interest rate movements, regional dynamics, technological advancements, and government policies. As with any investment, a thorough understanding of these factors, coupled with a strategic approach, will be essential for individuals and businesses looking to navigate the complexities of the real estate market in the coming year. By staying informed and adapting to evolving conditions, stakeholders can position themselves to make the most of the opportunities presented by the ever-changing real estate landscape.
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