The housing market can be volatile, but does that mean this isn't a good time to buy? Here's what to know for the market in 2024.

It's no secret that the housing market has faced some of the highest home prices and tightest inventories ever seen in recent years. Thanks to a certain pandemic and threats of another recession, buying a home today is a seriously daunting prospect for many adults.

It's as simple as taking a look at the median sale price for a home. As of December 2023, the cost averages $382,600 in the U.S. This is also the sixth year in a row that home prices saw an increase.

But what will 2024 bring? If you're looking to dive into the home buyer's market this year, here's what you need to know.

Decreasing Housing Market Rates

If you're a current homeowner you're probably well aware of the fact that homeowner rates doubled in the year 2022. This is due to the Federal Reserve's fight against increasing inflation. Unfortunately, rates have remained high, but in 2024, homeowners could face a reprieve.

The reality is that mortgage lenders take cues from the Federal Reserve. If the Feds increase rates, there's a high chance mortgage lenders will increase mortgage rates.

While rates remain steady in the first quarter of 2024, the Federal Reserve indicates that rate cuts could present themselves later in the year. As inflation pressure eases throughout 2024, this could also make way for a trend in lower mortgage rates.

However, it looks like this could only become a reality towards the latter part of this year.

An Increase in Home Sales

The price of homes remained steady throughout 2023, but the market saw a decline in the number of actual home sales. In fact, home sale numbers declined for 5 consecutive months before seeing a slight rise in numbers in November last year.

Despite a 6.2 percent drop in sales across the year, 2024 might look different. Trends predict that home sales could increase in 2024 thanks to a drop in mortgage rates, as mentioned above.

With mortgage rates set to remain above 6 percent in 2024, experts predict that home sales will increase, but not dramatically. Learn more about home pricing and what you could receive based on the budget you have by visiting manausa.com

A Small Increase in Housing Inventory

The supply of housing inventory faced a dismal reality in 2023. With a very low inventory rate throughout the entire year, there was not much opportunity for homebuyers with only a 3.2-month supply. These poor figures made for an off-balance housing market as a good 5-6 month supply of inventory makes for healthy competition.

In short, there just weren't enough homes for sale in 2023. But 2024 could look different.

Experts predict that inventory levels could improve thanks to a surge in homeowners listing their properties for sale. As well as a significant increase in new-construction homes hitting the market. Lower mortgage rates also make it more likely that homeowners will feel inspired to list their homes for sale.

Don't Expect a Drop in Housing Prices

One of the biggest hurdles potential homeowners have faced in recent years is housing prices. 2023 saw historic highs for the cost of homes, some just $30,000 short of the highest monthly home price ever recorded ($413,800).

With this in mind, the question on everyone's mind is whether housing prices will eventually stabilize and perhaps even drop throughout 2024. But according to the experts, this is not likely to happen anytime soon.

The reality is that home prices can only regulate or stabilize when there is a significant increase in housing inventory. In other words, the more houses there are for sale, the lower housing prices become.

Even though there is a predicted increase in housing inventory in 2024, it most likely will not be enough to regulate the market. The marketplace will quickly absorb any increase in home availability.

Prices are unlikely to fall over the space of one year. The market needs to see a significant increase in inventory for prices to begin to drop.

Is 2024 Another Seller's Market?

Due to the low inventory numbers within the housing market, this gives sellers prime opportunity. The simple fact of the matter is that there are more buyers than there are available homes on the market. This means that 2024 will be another seller's market.

Each home that becomes available makes it a hot commodity. This is because there isn't much to choose from for potential homebuyers, giving the average home seller the upper hand.

Throughout 2024, experts state that the market will remain unbalanced due to low housing inventory, keeping it in the seller's market. However, there is hope for improvement this year.

If mortgage rates retreat, this will inspire more home sellers to put their homes on the market. This will make for a better balance in the market than last year, but it's not likely to swing the market in a buyer's favor.

Housing Rental Costs Will Level Out

What about those who prefer to rent a home (or can only afford to do so)? The cost of rent saw huge increases throughout 2021, and 2022, and remained steady throughout 2023. Could 2024 be the year that rental costs begin to decline?

According to experts, it seems like renters can look forward to housing rental costs leveling out and evening dropping throughout the year. As of 2023, over 1 million multi-family units are being built across the U.S. Due to an uptick in the supply of this type of housing, prices in the rental market could decline.

Not only this, but existing homeowners could opt to become landlords due to an opportunity to purchase these new builds. This in itself can help to level out rental costs, too.

Looking to Become a Homeowner in 2024?

While predictions for the 2024 housing market are not all sunshine and roses, there are a few exciting opportunities that potential homebuyers can look forward to. The first is a decrease in lending mortgage rates, an increase in housing inventory, and even the potential for cheaper rent.

If you're new to the home-buying market, this is the site for you. Take some to explore our pages on seller's advice, mortgage advice, or buyer's advice, and arm yourself with knowledge before you sign that dotted line!