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Home prices and mortgage rates expected to ease in 2024

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Posted at 1:23 PM, Dec 11, 2023
and last updated 2023-12-18 16:06:59-05

Realtor.com is forecasting mortgage rates to drop to 6.5 percent by the end of 2024 (6.8% overall) and home prices to drop 1.7%.

"It is a step in the right direction towards a little bit more affordability after several years of home prices growing much faster than is historically normal," said Danielle Hale, Chief Economist at Realtor.com.

"For home shoppers who have been really frustrated with the lack of inventory, unfortunately, our forecast doesn't have good news. We expect inventory to continue to remain tight and actually even decline further."

First-time home-buyer Corinne Kingdollar can tell you all about that frustration.

"We started looking in April of last year and we're still looking."

Kingdollar's price range is between $350,000 and $400,000. She says the homes she's come across in Connecticut have needed so much work, it hasn't been worth putting in an offer.

"We looked at one home that was beautiful in theory, but the basement was filled with what looked like lead paint. It was peeling from the walls. There was mold everywhere, tree branches, and roots had like gone through the windows. It was going to be so expensive to fix that just the thought of bidding on the home, which was already a little expensive for the square footage, I just, I couldn't do it. So, we walked away. And that's kind of been the theme."

She found one in the neighborhood where she grew up and soon realized it came with a disclaimer.

"It was in budget and I said, 'What's wrong with this?' And it said, 'Not suitable for habitation needs to be completely torn down and rebuilt from the ground up.'"

"It's been very disheartening in a lot of ways."

While cautiously optimistic with prices and mortgage rates expected to ease, she worries about how competitive the market will be in the Spring.

"I think if they can find a home that fits their needs, that falls within their budget, which is still somewhat of a challenge in the housing market environment, then I think it makes sense to move forward," said Hale.

Renting is always an option.

"We expect rents to decline, but very modestly, just 0.2% in 2024," Hale said.

Click here for Realtor.com's rent vs. buy comparison.