Not quite, the forecast states. 2024 will not be a massive turnaround from 2023, but there will be positive movement on home affordability due to decreases in mortgage rates (the forecast predicts 6.5% by year’s end) and home prices (a 1.7% drop). In 2024, the projected monthly purchase cost for a median-price home is $2,200 (35% of typical household income) compared to 2023’s $2,240 (37% of typical household income).

However, mortgage rates will likely continue to constrain the market in other ways; homeowners who bought at low rates during the pandemic boom will likely stay put to keep paying those rates rather than a higher mortgage at a new home. This will pull down inventory (the forecast projects a 14% drop year-over-year). 

The forecast notes, though, that should rates drop faster than anticipated, that could incentivize sellers to enter the market. As the forecast notes, inflation—and to what extent it declines—will be the deciding factor in where mortgage rates land.

Absent a steep decline in mortgage rates, new construction is likely to be where most housing stock comes from (a 0.4% year-over-year increase in single-family home starts is projected) and a competitor for sellers. Home sales are projected to remain mostly static year-over-year (a 0.1% increase).

The forecast also stresses that the rental market will continue to be an important factor; supply outpacing demand suggests rent prices will drop slightly (0.2%), adding to the bend toward affordability.