Want to buy a home in 2024? Ensure you’re prepared with the latest information and a pre-approval from the Potempa Team! Click here to take the first steps to get approved for a home loan, and keep reading for our 2024 housing market predictions.
Interest Rates Are Expected to Drop in 2024
After hitting a more than two-decade high in late 2023, mortgage rates are set to ease up a bit, though not quite back to the rock-bottom levels seen during the pandemic. Expect rates to hover between 6% and 6.5% next year.
The Federal Reserve is expected to maintain interest rates at the beginning of the year. However, come summer, we anticipate two or three standard interest rate cuts, paving the way for a gradual decline in mortgage rates as the year unfolds. The average 30-year mortgage rate is projected to start around 7% in the first quarter but will gradually decrease throughout the year, reaching approximately 6.6% by the end of 2024. This downward trend and a slight dip in home prices offer a welcomed sigh of relief for prospective homebuyers.
Both Home Prices and Home Sales Will Increase
Our 2024 housing market predictions continue with growth in both home prices and overall sales projected across the country. According to Lawrence Yun, Chief Economist at the National Association of Realtors, home prices are expected to climb by 3-4%. Underlying demographic trends fuel this upward trajectory, with robust demand and low inventory set to characterize the market next year and throughout the rest of the decade.
If you want to buy a home in 2024, you should anticipate a small boost in inventory next year, although the supply of available homes will remain relatively low. One significant factor at play is the behaviors of the baby boomer generation. The combination of ultra-low mortgage rates below 3% and a scarcity of suitable downsizing options has contributed to this demographic’s slower pace of listing activity. However, many homeowners are realizing rates aren’t headed back to pre-pandemic levels anytime soon, and people who need to sell will likely do so this year before home prices can correct downward.
New Conventional Loan Limits for 2024 and Changes to ADU Financing Will Help with Affordability
2024 will see conventional loan limits rise nationwide, with high-cost markets seeing a nice bump to $1.1 million. This will help more prospective buyers deal with rising housing costs in 2024.
In addition, recent changes to ADU financing could help some first-time buyers achieve the dream of homeownership in 2024. In October 2023, the US Department of Housing and Urban Development (HUD) “announced a new policy which allows lenders to count income from small units of housing built inside, attached to, or on the same property as a primary residence.” Some highlights of this policy include the ability for lenders to “allow 75% of the estimated ADU rental income for some borrowers to qualify for an FHA-insured mortgage on a property with an existing ADU.”
What do these 2024 housing market predictions mean for your journey to homeownership? Contact us at the Potempa Team to connect with a member of our expert lending team who can answer all your questions and get you pre-qualified to purchase the home of your dreams in 2024!
