The housing market for home buying or selling is always fluctuating, with prices and demand going up and down from year to year. As we enter 2024, many home buyers and sellers are wondering if this will be a good year to make a move in the real estate market. There are several factors to consider when determining if 2024 looks promising for buying or selling.  

Interest Rates 

One of the most significant factors in the housing market is mortgage interest rates. In 2023, interest rates increased sharply, going from around 3% to over 7% by the end of the year. This led to a cooling housing market, as higher interest rates meant higher monthly payments, pricing some buyers out.  

The Federal Reserve has indicated they may continue raising rates in 2024 if inflation remains high. This means interest rates will likely remain high compared to the past couple of years. High rates tend to deter buyers and slow home price appreciation. For buyers, higher rates mean affording a home will be more challenging. For sellers, it reduces the pool of buyers who qualify for a mortgage. 

Home Prices 

Due to the hot pandemic housing market, home prices rose sharply in 2020 through 2022. This was due to high demand and low inventory. However, rising interest rates in 2023 led to slowing price growth, as unaffordable payments priced buyers out.  

Many experts predict home price appreciation will continue slowing down in 2024 or even see slight declines in some markets. As interest rates rose in 2022, housing markets cooled significantly. This trend will likely continue in 2024. Slowing price growth and possible price drops in some areas will favor buyers. For sellers, it means you may not see large returns on your investment like in previous years.  

Economy and Job Market 

The stability of the overall economy and employment situation will also impact the housing outlook in 2024. If a recession hits, causing widespread job losses, demand would decline as buyers lose income or confidence in making such a large purchase. In that scenario, lower demand favors buyers, while sellers have fewer prospective buyers. 

Currently, the economy remains relatively strong despite rising recession concerns. Unemployment is still low at 3.4% as of January 2024. Many expect a mild recession, if one occurs, rather than a severe one. Barring any larger economic turmoil, the job market looks solid for 2024. Steady employment will support housing demand. First-time homebuyers entering the market will also keep demand afloat. 

With a potential mild economic downturn, the housing market impact may be moderate in 2024. Buyers may be able to find more affordable options and negotiating power. But a huge wave of foreclosures is unlikely. Overall, the U.S. economy should allow for a stable housing market. 

Demographic Trends While Home Buying 

Demographic changes will also affect the housing market. Millennials are a huge population cohort and are in their 30s and 40s now when home buying is common. Millennials delayed homeownership compared to previous generations but are starting to buy in larger numbers. This demographic shift will continue to support demand.  

Downsizing baby boomers and work-from-home trends during the pandemic also fueled interest in suburban and rural markets as people sought more space. Some of these pandemic-driven trends may moderate in 2024. However many companies plan to allow remote work flexibility for the foreseeable future. This will allow workers to live further from offices, expanding target home search areas. 

While demand from millennials and workers with location flexibility stays strong, home building has been limited in recent years. A housing shortage persists, especially for starter homes. Until inventory opens up, prices are unlikely to fall dramatically across most markets. Demographic tailwinds will continue supporting the market in 2024.  

So is 2024 a good year to buy or sell a home? There are arguments on both sides. The housing market is moderating from the feverish conditions of recent years, giving buyers more selection and negotiation power. However limited inventory, high construction costs, and demographic demand will prevent prices from collapsing.  

This year may favor buyers slightly, but sellers who price competitively can still capitalize on elevated prices. Don’t attempt to time the market perfectly—it’s impossible. Focus instead on your motivations, needs, and financial situation when deciding whether to buy or sell. The housing market in 2024 will have its share of pros and cons for both buyers and sellers.