Market Data
The Housing Market in 2024: A Challenging Landscape for Buyers
Those who procrastinated on property purchases may be kicking themselves. Over the past year, both mortgage rates and home values have risen significantly, making it tougher for aspiring homeowners to enter the market. However, there are 16 U.S. markets where prices are below the national median and continuing to fall, offering some hope for budget-conscious buyers. Despite the challenges, 2024 has proven to be one of the most difficult years for first-time buyers in decades, according to real-estate analyst Ivy Zelman.
Why 2024 Has Been a Nightmare for First-Time Buyers
The main culprits behind the affordability crisis are rising mortgage rates and home prices. Thirty-year fixed mortgage rates have climbed to 6.9%, up from 6.6% in February 2023 and significantly higher than the late-September 2023 lows of 6.1%. Fifteen-year rates are also at 6.1%, compared to 5.9% during the same period in 2024. Home values have seen substantial growth as well, with the median price for existing single-family homes reaching $410,100 in the fourth quarter of 2024—4.8% higher than the previous year. While this figure is slightly lower than the peak of $422,100 in the second quarter, it still underscores the rapid appreciation of home prices across the U.S.
The Widespread Rise in Home Prices
The surge in property prices has been widespread, with home prices increasing in 89% of the 226 U.S. markets tracked by the National Association of Realtors (NAR). In fact, 14% of cities saw double-digit price growth in the last quarter of 2024, twice the rate of the previous quarter. Only 23 cities experienced falling prices, leaving buyers with limited options.Regionally, the Northeast and Midwest saw the sharpest increases, with home prices rising by 10.6% and 8%, respectively. In contrast, the West saw a 4% rise, while the South experienced a more modest 2.1% increase.
The Frustration for Buyers in the Northeast and Midwest
For buyers hoping to settle down in the Northeast or Midwest, the situation is particularly daunting. These regions have seen some of the steepest price increases, making it even harder for first-time buyers to afford homes. Over the past five years, mortgage rates have nearly doubled from just under 3.5%, while median property prices have surged by 49.9%, according to the NAR. This rapid escalation in both rates and prices has left many potential buyers feeling squeezed out of the market.
Silver Linings for Buyers on a Budget
Despite the overall challenging market, there are some encouraging signs for buyers. The NAR reports that monthly mortgage payments for existing homes with a 20% down payment have actually decreased, falling to $2,124—1.7% lower than in late 2023 and 0.8% less than in the third quarter of 2024. Additionally, homeowners are spending less than 25% of their income on mortgages, which is close to historical norms.
16 Affordable U.S. Markets Where Prices Are Falling
For buyers on a budget, there are still opportunities in specific markets where home prices are both below the national median and falling year-over-year. These 16 cities, scattered across the U.S., offer a glimmer of hope for those seeking affordability. While the housing market remains tough, these areas provide a rare advantage for buyers willing to act quickly. As Lawrence Yun, chief economist for the NAR, noted, "Renters who are looking to transition into homeownership face significant hurdles." However, for those who can navigate the challenges, these markets may offer a way to build equity sooner rather than later.
