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  • In 2024, homebuyers can expect lower mortgage rates, higher home prices, and a lot more competition.
  • Hopeful 2024 buyers should start preparing now by saving money and paying down debt to improve credit scores.
  • Look into affordable mortgage programs and down payment assistance to boost affordability.

After watching mortgage rates hit two-decade highs and inventory plummet in 2023, many hopeful homebuyers are eager to get off the sidelines and into a home.

While 2024 is shaping up to be a better year for the housing market in many respects, a lot of buyers are still going to struggle to find affordability. If you’re planning to buy a house next year, here’s what you need to know about housing market predictions in 2024, and how you can prepare.

Home price predictions 2024

Experts generally expect home prices to increase in 2024.

  • Fannie Mae currently sees home prices rising 2.8% year over year by the end of 2024
  • The Mortgage Bankers Association believes prices could rise as much as 4.1% next year
  • The National Association of Realtors has more conservative expectations and thinks existing-home prices will inch up just 0.7% overall in 2024, with a possible small dip in prices in the second quarter
  • Realtor.com stands out in predicting that prices will fall 1.7%

Low home inventory is a chronic problem in the US. This has generally kept home prices up, even as mortgage rates peaked near 8% and homebuying demand plummeted this year. Demand is expected to increase next year, so even if home prices do drop in 2024, they likely won’t fall enough to significantly improve affordability on their own.

Mortgage rate predictions 2024 

Here’s where we’ll probably find more affordability in 2024: mortgage rates. They’ve already been trending down in recent weeks, and experts predict we’ll see mortgage rates go down in 2024. The average 30-year fixed mortgage rate could even fall near 6% by the end of the year. 

  • Fannie Mae forecasts a more gradual drop in rates and believes 30-year fixed rates will remain in the low 7% range during the buying season — which typically lasts from spring through early fall — and reach 7.1% by the end of 2024
  • The MBA’s forecast is more aggressive, predicting that mortgage rates could hover in the 6.3% to 6.6% range during the peak homebuying season before falling to 6.1% to close out 2024
  • NAR predicts rates will be in the upper 6% range for the homebuying season and drop to 6.3% in the last quarter of the year
  • In its latest forecast, Realtor.com said it believes mortgage rates will average 6.8% overall in 2024 and reach a low of 6.5% by the end of the year

Whether mortgage rates actually trend down in 2024, and by how much, depends on the path the Federal Reserve takes in its fight against inflation.

Investors believe the Fed may start cutting rates next year, which would remove a lot of upward pressure off of mortgage rates and allow them to fall more substantially. But Fed officials have made it clear they want to see more data on how inflation is trending before they consider taking the foot off the gas. If inflation stops decelerating or speeds back up, the Fed could hike the federal funds rate, pushing mortgage rates higher.

Will the housing market crash in 2024?

Because home prices have increased so dramatically in recent years, doomsayers believe that the housing market is in a bubble, and it’s only a matter of time before it bursts and the market crashes. But it’s actually pretty unlikely that will happen.

One of the main reasons we’re unlikely to see the housing market crash in 2024 has to do with housing inventory. The US simply does not have enough homes to meet demand, which is keeping prices steady. 

Of course, no one has a crystal ball. If demand were to plummet, home prices could start falling. A severe recession could cause this to happen, for example. While some analysts think we could experience a recession next year, it’s not a given that the housing market would crash as a result.

When will the housing market crash?

The fact is, it’s hard to predict a housing market crash. Right now, the conditions aren’t right for one — even though demand is low, supply remains even lower. And demand is expected to improve in 2024, while supply will likely remain a chronic problem for years to come.

What this means for 2024 homebuyers

If you’re hoping to buy a house in 2024, you’ll want to start planning now. Next year is going to be better for buyers than 2023 in many ways, but it’s also going to be more challenging when it comes to prices and competition.

Lower mortgage rates will undoubtedly improve affordability for borrowers, but with that will come increased demand. This will keep home prices high and likely push them up even further. Finding a home in your price range may become even trickier, and you may need to make a lot of offers before you get one accepted.

How to prepare to buy a house in 2024: 5 tips

Here’s what you should be doing now to prepare for homeownership in 2024.

1. Get your finances ready now

Because home prices are likely to remain high, you’ll want to take advantage of lower mortgage rates by making sure you get the lowest rate you can. 

One of the faster methods to get your credit score up is to lower your credit utilization. This will also decrease your debt-to-income ratio, which is another factor mortgage lenders look at when considering what rate to give you.

J.R. Russell, head of direct to consumer mortgage lending at Citi Mortgages, says homebuyers should consider paying off credit card balances to improve their scores ahead of the 2024 homebuying season.

“If you’re trying to pay off or pay down some credit cards, start with the cards or credit lines with the highest interest rates first,” Russell says. “Then, pay off the balances that are smallest. The good news is that if you do this, you’ll improve your debt load and your credit score.”

2. Look for affordable mortgages and other first-time homebuyer assistance

The key to affording homeownership for many buyers in 2024 will be utilizing mortgages geared toward first-time homebuyers and combining them with grants or other forms of down payment assistance.

“If you’re not sure that your down payment will be sufficient, take time to understand all of the available products that you may be eligible for through the FHA or VA, your bank, or other local institutions,” Russell says. “These programs may grant you access to down payment assistance and low-to-moderate income programs, among other game-changing resources.”

Conventional loans allow down payments as low as 3%, while FHA loans allow 3.5% down payments. USDA and VA loans allow no down payment. 

Look into lenders that offer special mortgage programs that come with additional assistance. Rocket Mortgage, for example, offers a ONE+ mortgage that allows borrowers to put down just 1%, with the lender providing a 2% grant.

Bank of America mortgages, another popular lender for first-time buyers, offers a couple of different forms of down payment assistance.

3. Time your purchase right

There probably won’t be a single “best time” to buy in 2024, because that depends on each buyer’s priorities — so it’s important that you figure out yours.

If getting the lowest rate possible is most important to you, you’ll want to wait until later in the year to buy, possibly until the second half of 2024. But if you’re looking to avoid competition, buying earlier in the year might be a better bet. Plus, you could always plan to refinance later on as rates drop.

4. But don’t rush

“If rates do start to moderate and the market does seem to become more favorable to buying in 2024, it will likely stay this way for a while,” Russell says. “If that’s the case, I encourage you to take your time! Don’t put pressure on yourself to make any potentially hasty decisions on what may be your biggest asset and the largest financial decision of your life.”

Though it’s still a while away, forecasts generally expect mortgage rates to continue falling in 2025. If you don’t feel ready to buy by the time the 2024 buying season rolls around, there’s nothing wrong with waiting a bit to continue saving and working on your credit.

5. Build your savings

Whether you’re padding your mortgage down payment savings or contributing to your emergency fund, tucking away some extra cash now is vital if you plan on buying in 2024.

When you buy a house, you’ll need enough cash to cover both your down payment and closing costs, which can amount to between 3% and 6% of the loan amount. While many mortgage programs allow low down payments, the more you can put down, the better your interest rate will likely be. Plus, offers with larger down payments are often more attractive to home sellers, giving you a competitive edge in what will likely be a tough market.

Homeownership is also often more expensive than many first-time buyers realize, especially in the first year. Having some extra money set aside for unexpected costs will help ensure you don’t go into debt when your first big housing expense comes along.

Housing market predictions 2024 FAQs

Will mortgage rates drop in 2024?

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Experts expect mortgage rates to drop in 2024, and 30-year fixed rates could end the year closer to 6%.

Will there be a housing recession in 2024?

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There probably won’t be a housing recession in 2024 based on current expectations, as limited inventory is likely to push prices up further. Expect to see higher prices, lower mortgage rates, and more buyers in 2024.

Will 2024 be a better year to buy a house?

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In general, 2024 should be a better year to buy a house compared to 2023, but it will still be tough due to increased competition and higher prices.

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