Home prices could drop in 2024: why shouldn’t you wait to buy?

Experts’ expectations for 2024 mortgage rates and home prices could set up a favorable housing market for buyers, however, it may not be a good idea to hold off on buying a home.

Real estate experts have indicated that home prices and mortgage rates would drop sometime in 2024. That’s great news for homebuyers, especially first-time homebuyers who have put off buying after 2022 was an adverse market for them. However, they should not lose sight of the fact that this is only an estimate, as no one can accurately predict what will happen, so it may not be the best idea to wait until next year to buy a home.

As of this Monday, the average interest rate for the benchmark 30-year fixed mortgage reached 7.08%. However, with the economy expected to cool and possibly fall into a recession, many recent forecasters expect rates to fall to 6% or lower by 2024, including a Fannie Mae projection of 5.2%.

Based on an estimate of a $300,000 mortgage loan with a 30-year fixed rate, a 1% drop in mortgage rates would equate to about $200 in monthly mortgage costs.

Also, specialists suggest that home prices could fall by 1% to 10% from the highs of 2022, when in June of that year prices exceeded $450,000, on average, in the United States.

Should you buy a home in 2024?

After the encouraging expectations heading into 2024 for the housing market, many buyers might immediately think (and not be wrong to do so) that they should wait until that year to buy a home. However, we invite them to be more judicious and weigh other factors that could affect this outlook.

There is no guarantee that all of these 2024 estimates will be effective. Many consumers may be under the misapprehension that these specialist estimates suggest that they could fall precipitously, as they did during the pandemic. That is not the case. They should not expect them to reach the historic lows of the last decade.

“In my view, going back to 3% or 4% mortgage rates is not going to happen,” mentioned Lawrence Yun, chief economist for the National Association of Realtors (NAR), who notes that historically rates have been higher. The low rates in 2020 and 2021 were “unique” and the people who got them were “lucky,” he noted.

As for home prices, a price correction is expected to be short-lived due to the chronic housing shortage. Lower mortgage rates could also stoke demand, which would likely push prices higher.

It is also important to keep in mind that real estate trends vary by region, which means that home prices in your area may not fall in either 2023 or 2024.

No one can predict exactly how the housing market will move, these are estimates based on data and analysis from specialists; but any situation can change the game in a few months or a year (e.g., pandemic). In short, despite the reduction, rates and prices will not vary on a large scale as they did a few years ago, so there may not be a big difference between mortgages and costs in 2023 and 2024. If you want to buy a house, buy it.