(NEXSTAR) – After two years of sharp increases in U.S. home prices and mortgage rates, 2024 could see some relief in the real estate market, according to a new report from Realtor.com.
Overall, real estate companies predict a 1.7% decline in home prices next year, but even larger declines are expected in 21 of the nation's largest metropolitan areas that Realtor.com analyzed in its forecasts.
Austin, Texas, is likely to see the steepest decline, with an expected drop of 12.2%. Home prices could decline in three other Lone Star State cities, including San Antonio, Dallas and Houston.
Here is the complete list:
| metropolitan area | Expected rate of decline in house prices (%) |
| Austin, Texas | -12.2 |
| St. Louis, Missouri | -11.7 |
| spokane, washington | -10.2 |
| San Antonio, Texas | -9.4 |
| texas, dallas | -8.4 |
| portland oregon | -7.4 |
| Baton Rouge, Louisiana | -5.6 |
| San Francisco, California | -5.2 |
| denver, colorado | -5.1 |
| Sarasota, Florida | -4.9 |
| Nashville, Tennessee | -4.8 |
| houston, texas | -4.5 |
| Phoenix, Arizona | -4.3 |
| Salt Lake City, Utah | -4.1 |
| memphis tennessee | -4.1 |
| Ogden, Utah | -3.8 |
| stockton california | -3.7 |
| Lakeland, Florida | -3.5 |
| boise city, idaho | -3.4 |
| Cape Coral, Florida | -2.9 |
| Las Vegas, Nevada | -2.3 |
The typical American home price soared to $410,200 in June, the second highest price in 24 years, according to the National Association of Realtors (NAR). By October of this year, the median price had stabilized, dropping to $379,100, but it was still 40% higher than in October 2019.
Real estate agents say changes in home affordability may encourage some first-time buyers to enter the market, while high mortgage rates may discourage some current homeowners from entering the market. He said it may deter people from moving.
Meanwhile, Zillow's 2024 outlook shows that homeowners who bought homes when interest rates were at record lows will “get tired of waiting for 2021's historically low interest rates to return” and put their homes up for sale. He said he expected that.
The average interest rate on a 30-year fixed mortgage in the U.S. was 7.22% as of November, the Associated Press reported Thursday, citing mortgage buyer Freddie Mac. Realtor.com predicts that percentage will drop to an average of 6.8% next year.
“While there is no significant breakthrough in the impasse that has plagued the housing market over the past year, 2024 could be a small step in the right direction,” said Daniel Hale, chief economist at Realtor.com. said. “It will stop getting worse.”
Similarly, NAR Chief Economist Lawrence Yun believes interest rates will fall between 6% and 7% by spring.
While the market may stabilize next year, Realtor.com predicts there will still be challenges, including weak home sales, low inventory and a lack of move-in homes in desirable areas.
