US Housing Market Outlook for 2024: Modest Improvements Amid Ongoing Challenges

The US housing market in 2024 is expected to see some relief, but many challenges from 2023 will persist. According to Business Insider, mortgage rates are predicted to decline slightly, averaging around 6.8% compared to 7.22% in 2023. This reduction may ease the pressure on buyers, allowing home prices to drop by about 1.7%. However, the “lock-in effect” will continue, with homeowners hesitant to sell due to existing low mortgage rates, leading to a 14% drop in available inventory.

Homebuilders are expected to play a crucial role in mitigating the supply shortage by increasing construction, especially in multi-family properties. This increased activity could help balance the market, though the price impact might be minimal due to high demand. Rent growth is also projected to slow, with a slight decline in rental prices as vacancy rates rise.

Despite these modest improvements, affordability remains a significant issue. Americans will need a record income to purchase homes, with the average required salary estimated at $114,627. The combination of easing mortgage rates and slowing price increases should offer some mental relief for buyers, reducing the sense of urgency that has characterized the market in recent years.