Yahoo Finance

• High mortgage rates and home prices sidelined many Americans from the housing market in 2023.

• Zillow economists say some conditions may ease in 2024 as more homes are listed for sale.

• The real-estate group shared six predictions for next year.

High mortgage rates, low inventory, and elevated home prices have defined the US housing market in 2023.

Those conditions have kept many current homeowners from moving, hesitant to give up the lower mortgage rates they secured in prior years, which in turn has left prospective buyers with fewer homes to choose from.

The result has been a frozen housing market. Buyers aren't buying because sellers aren't selling, and vice versa. It's led to stubbornly high prices amid mortgage rates that are high in relation to recent history, a cocktail that's created an affordability crisis in US housing.

But things may be looking up next year, Zillow researchers say, and Americans may see some relief as the calendar changes.

Here are six predictions the real-estate group has for 2024.

1. Higher-for-longer interest rates will lead to more homes on the market

As house hunters and current owners come to terms with the new normal of high mortgage rates, Zillow expects more homes to go up for sale as people lose patience waiting for rates to fall before jumping back into the market.

A growing share of reluctant homeowners who haven't sold homes in the last two years could give in to listing their properties, which ultimately could lead to a greater supply of housing.

2. Home-buying costs will level off

As of October, a typical homebuyer would have spent more than 40% of their earnings on a mortgage payment, an all-time high indicated by Zillow data going back to the 1990s.

Homes may not get less expensive, but the rate of growth could level off and provide Americans some time to catch up via wages and savings.

"Predicting how mortgage rates will move is a nearly impossible task, but recent inflation news gives the impression that rates are likely to hold fairly steady as well in the coming months," Zillow researchers said. "Taken together, the cost of buying a home looks to be on track to level off next year, with the possibility of costs falling if mortgage rates do."

3. Higher demand for single-family rentals

Zillow expects demand for single-family rentals to ramp up next year as families seek out affordable options.

"One possible path to more single-family rental inventory is homeowners deciding to turn their home into an investment property and rent it out rather than selling it when they move," researchers said. "The ultralow mortgage rates held by many existing homeowners make it more likely that this option would pencil out."