With a combination of inflation, rising home prices, higher mortgage rates compared to recent years, and a short supply of housing, 2023 was tough on the housing market. In addition to rising costs, wages didn’t increase nearly as fast as homebuying costs, with the average American spending 41.4 percent of their annual income on an average-priced home according to Redfin.
However, this year saw a small upside for renters. From January to October, monthly rental prices only increased by $6 nationally to an average of $1,736 per month. For homeowners, there was also some good news: Property values continued to rise as did median sales prices and home equity. The median sales price for existing homes rose to $408,806, according to Redfin, which is the highest of any recorded year.
Now, let’s look ahead to what’s in store in the new year.
While some relief is on its way for the 2024 housing market, this year’s challenges may continue. It’s expected that borrowing costs will begin to fall as interest rates decline slightly, while home prices may drop an estimated 1.7% according to Realtor.com. More new listings will add to inventory in 2024, too, although overall supply will remain low and active listings will still be below 2019 levels, according to Bright MLS.
In total, we could see some small home-price gains and easing on inventory constraints in 2024. Keep in mind that there are a few resources that can help homeowners and new buyers to the market find more affordable options. Some lending products, such as longer-term mortgages or temporary rate buydowns, may help with affordability even in this challenging market. You may also take advantage of concierge services and special offers for discounts when you buy or sell a home. Things are starting to look positive for the U.S. housing market in the new year.