As we look ahead to 2024, the real estate landscape in Tennessee and across the nation is showing signs of evolving, with implications for homebuyers and sellers alike. Drawing from insights provided by realtor.com, a leading real estate listings website, we delve into the anticipated trends and changes in the housing market for the coming year.
Mortgage Rates in 2024
The trajectory of mortgage rates is a vital component for potential homebuyers. After experiencing an average rate of 6.9% in 2023, with an expected year-end rise to 7.4%, the mortgage landscape in 2024 is forecasted to be somewhat more favorable. Predictions suggest an average rate hovering around 6.8%, with a significant decrease to about 6.5% by the end of 2024. Notably, over 90% of mortgages currently remain under 6%.
Housing Price Trends
The Tennessee housing market is expected to undergo a mild downturn, with home prices projected to decrease by approximately 1.7% in 2024. This follows a slight uptick in 2023, where median home prices marginally surpassed those of 2022. The anticipated price drop, coupled with reduced mortgage rates and income growth, is set to lower the median income required for home purchases to an average of 34.9%, down from 39% in 2023.
Home Sales Volume
The volume of home sales is another critical factor shaping the 2024 housing market. The surge in mortgage rates in mid-2023 led to a cautious approach among buyers, contributing to a notable reduction in new home purchases. Consequently, the total number of homes sold in 2023 is estimated to be just over 4 million, marking a 19% decrease from the 5 million sales in 2022. Given the high mortgage rates, a similar trend of stagnant home sales is anticipated for 2024.
Regional Market Forecasts for Tennessee
Focusing on Tennessee’s metropolitan areas, 2024 is poised to see varied trends:
- Chattanooga is expected to experience a 3.6% decline in sales but a 2.0% increase in prices.
- Knoxville may see a 5.9% decrease in sales with a 7.2% rise in prices.
- Memphis and Nashville are both predicted to face reductions in both sales (-10.8% and -11.4%, respectively) and prices (-4.1% and -4.8%).
Availability of Homes
Since 2012, the housing supply has been consistently shrinking, exacerbating the shortage as the demand for homes outstrips the supply. Single-family home construction has returned to pre-pandemic levels, while multi-family home construction is hitting record highs.
The Rental Market in 2024
After experiencing robust growth in 2021 and 2022, the rental market is showing signs of stabilization. 2024 is likely to maintain this trend, with the median asking rent expected to drop marginally by 0.2%. Renting remains a more affordable option, especially as both median asking prices and mortgage rates are projected to decline.
Prospects for First-Time Homebuyers
For first-time buyers in Tennessee, 2024 presents a market that, while still challenging, offers some relief. The proportion of income required for home purchases is expected to decline, with the average cost of buying a home predicted to fall below $2,200, approximately 35% of income. This is a slight improvement from the 37% income requirement in 2023.
Conclusion
The 2024 housing market in Tennessee is shaping up to be a mix of challenges and opportunities. While home prices and sales volumes are expected to decrease, mortgage rates are likely to become more favorable, offering potential relief for buyers. Understanding these trends is crucial for anyone looking to navigate the real estate landscape in Tennessee in the coming year.
At Your Home Offer, we remain committed to guiding you through these changing times with expert advice and tailored services. Whether you’re planning to buy or sell in Tennessee, our team is here to support your real estate journey in 2024 and beyond.