Look back 2023 & 2024 Hottest Housing Market – Zillow Report

  • Buffalo, New York, is anticipated to be the leading housing market in 2024. This prediction is based on Zillow’s comprehensive analysis of real estate trends.
  • The forecast suggests a shift in housing market dynamics. Factors like affordability, job market conditions, and demographic trends are influencing this change.
  • The broader housing market is expected to see more homes for sale and improved affordability. This trend indicates a potential easing of the tight market conditions experienced in previous years.
A Look Back at 2023 US New Home Sales Activity link
In 2023, new home sales in major metro areas declined, with New York experiencing the largest drop. New home prices increased by only 2% through November 2023, a significant slowdown compared to the 10% growth in 2022.

The South, particularly Dallas and Houston, led the U.S. in new home sales. In contrast, New York’s new home sales were predominantly condos, making it an outlier in the top 10 Metropolitan Statistical Areas for new home sales.

Overall, the U.S. housing market saw a sharp decline in home sales since 2021. High interest rates in 2023 dampened demand, and builders lacked incentives to return to pre-2021 construction levels. However, active investors in the market may provide some demand for new home sales.
Key Forecast Themes for 2024 link
The 2024 forecast anticipates continued economic growth, albeit at a slower pace, with strong wage growth and extended renter lifecycles driving demand. Supply is set to be the main factor influencing market-level rent growth, with a direct correlation between supply levels and rent growth rates.

Absorption rates have stabilized in 2023, with about 250,000 units absorbed, aligning with the U.S. average since the 2010s. The fourth quarter of 2023 saw particularly strong demand, indicating a robust capacity to absorb the significant supply expected in 2024.

Rent growth slowed considerably in 2023, with a year-ending growth of only 0.2%, but there’s a slight upward trend in rent growth momentum. The focus in 2024 is expected to shift towards occupancy preservation, with modest rent growth and significant market-level variations, especially in regions like the Midwest and Northeast.
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