On this page: A collection of U.S. real estate market predictions for 2024 – 2025, curated from multiple sources and explained by HBI’s housing analysts.
The U.S. real estate market has experienced some wild swings in recent years. After booming during the pandemic and sputtering through 2023, the market has now settled into a new normal for 2024.
This is what it looks like:
- Mortgage rates have declined since last year.
- Buyers are reentering the market in higher numbers.
- Home prices are inching upward after a long plateau.
Unfortunately, this “new normal” could also bring challenges for home buyers in 2024, in the form of tight inventory conditions. So let’s explore these and other real estate market predictions for 2024.
Curated Real Estate Market Predictions: 2024 – 2025
Modest home-price growth in most cities, more homes coming onto the market, and more favorable mortgage rates than last year.
Those are a few of the real estate predictions being offered for 2024. Overall, it could be a better year for home buyers, due to increased inventory and lower interest rates. But buyers should also be aware of rising prices and the impact it has on their purchasing power.
Here’s a breakdown of the latest real estate market predictions for 2024:
1. Home prices will inch upward in most cities.
A number of housing forecasts for 2024 have predicted that home prices will rise over the coming months. We’ve curated two of those real estate predictions below, adding some background commentary to tie it all together.
According to data reported by Zillow, the median home price in the U.S. was around $342,685 as of February 2024. That was a 2.6% increase from a year earlier. Looking forward, they predicted that the median price would rise by 3.5% during 2024.
Freddie Mac, the government-sponsored buyer of mortgage loans, issued a similar real estate market prediction for 2024. In a report published in January, Freddie Mac’s researchers wrote:
“The demand for housing, however, will remain high based on a large share of Millennial first-time homebuyers looking to buy homes, which will push home prices up. We forecast home prices to increase 2.8% in 2024 and 2.0% in 2025 nationally.”
If we average these two annual predictions (+3.5% and +2.8%), we end up with a forecast of 3.15% home price growth during 2024.
But these are national real estate market predictions for house values. As you know, housing market conditions can vary widely at the local and city level. So we’ll actually see a broad spectrum of price trends in 2024, with some local markets above or below the national average.
Here’s a summary of this real estate market prediction:
Most U.S. cities are expected to see modest price growth in 2024. But in some cities, home values could remain flat over the coming months or (less commonly) decline a bit further.
2. Mortgage rates will hover around 6.5% and then decline.
Next we turn to mortgage rates, another important driver of real estate market conditions and trends. And here the news is mostly good.
After climbing to a 20-year high last year, mortgage rates have declined and are expected to fall a bit further in 2024. This real estate prediction bodes well for home buyers, especially since home prices are expected to rise this year.
Freddie Mac’s latest real estate market prediction suggests that the average rate for a 30-year fixed mortgage loan will trend downward in 2024. That’s partly because they believe the Federal Reserve will introduce some rate cuts later this year.
Background: The Fed does not control mortgage rates directly, but their policies strongly influence consumer borrowing costs. If they decide to reduce the federal funds rate later in 2024, mortgage rates could become more favorable as a result.
Here’s an excerpt from Freddie Mac’s January real estate market predictions:
“We expect [Federal Reserve] rate cuts in the second half of the year if the job market cools off enough to keep inflation muted. Under this scenario, we expect mortgage rates to ease throughout the year while remaining in the 6% range.”
3. More homes could come onto the market this year.
Throughout much of 2023, housing market inventory was limited by homeowners with low mortgage rates who didn’t want to take on a higher rate by purchasing another home. So they chose to stay put instead.
This trend came to be known as the mortgage rate “lock-in effect,” the real estate market buzzword of the year.
But now that rates have declined by more than one percent since last year’s peak, sellers appear to be more willing to list their homes for sale.
Which brings us to our third real estate market prediction for 2024.
Over the coming months, inventory levels could rise in many housing markets. This would give buyers more options to choose from, while reducing the number of “bidding war” scenarios.
According to a February report from Realtor.com:
“Sellers became more eager this January as new data indicated they’re getting ready to sell, if not already there. The number of homes actively for sale was notably higher compared to last year, growing by 7.9%…”
Some economists expect this trend to continue throughout 2024, especially if Federal Reserve rate cuts lead to lower mortgage rates later this year.
4. But tight inventory will continue to challenge buyers.
While some real estate predictions see a rise in inventory in 2024, home buyers in many U.S. cities will still have to grapple with low supply levels this year.
Whatever inventory growth we see in 2024 will likely be modest in nature. It will be a situation where a verytight real estate market might become a little less tight—but still challenging for home buyers.
Freddie Mac’s January 2024 housing forecast, cited earlier, sums it up nicely:
“The existing housing inventory grew 15.3% year to date in November but the level of inventory (1.1 million homes available for sale in November) remains extremely low by historical standards.”
The “months of supply” metric, which is used to track housing market supply levels over time, has improved since the record lows of the COVID-era real estate boom. But it’s still hovering below 3% nationally. This means that in most real estate markets across the country, sellers continue to hold the upper hand in terms of negotiating power.
And that paves the way for our fifth and final real estate market prediction for 2024.
5. Overall, competition for buyers will remain high in 2024.
The housing market is undergoing some changes that could benefit home buyers throughout 2024. But overall, buyers will continue to experience a high level of competition, mainly due to the ongoing inventory shortage mentioned above.
In 2024, the real estate market won’t be nearly as competitive as it was during the pandemic-era home buying frenzy. But it will likely be more competitive than last year, with lower mortgage rates bringing more buyers into the market amid tight supply conditions.
Bottom line: You’ll still have to bring your ‘A’ game when house hunting in 2024.
Quote of the Month: “Increases in Inventory”
Each month, we offer a new “quote of the month” that underscores an important trend within the U.S. real estate market and reflects the predictions presented above.
This month, that quote comes from Danielle Hale, chief economist for Realtor.com. In the company’s most recent housing market report, published in early February, Hale wrote:
“We are seeing increases in inventory and, importantly, gains in newly listed homes for sale indicating sellers are more ready to make moves.”
This could be one of the most influential real estate market trends of 2024, with potentially far-reaching effects. If these inventory gains continue going forward, the market could become a lot more buyer-friendly than what we saw last year.
5 Key Takeaways From This Report
We’ve covered a lot of important information and real estate market predictions in this report. Here are the five most important takeaways for home buyers:
- Modest Price Increases: Most cities will see home prices rise slightly in 2024, though some could remain flat.
- Improved Mortgage Rates: Mortgage rates are predicted to be around 6.5% and could decline further toward the end of the year.
- Inventory Rising (Slightly): Expect more homes on the market in 2024, easing some of the extreme inventory shortages of the past few years.
- Still a Seller’s Market: Limited inventory will continue to drive competition among buyers despite modest improvements.
- Be Prepared to Compete: Homebuyers should be ready to act decisively in 2024’s market, even if it’s less frenzied than during the pandemic.
Disclaimer: This report includes real estate predictions and projections for 2024, provided by third parties not associated with the Home Buying Institute. Such predictions are the equivalent of an educated guess and should be treated as such. No one can predict future housing trends with 100% accuracy.