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- The housing market is bound for a renaissance in 2024, according to the National Association of Home Builders.
- Housing construction and demand is showing signs of perking up, CEO Jim Tobin said.
- "We had some bigger numbers earlier in the late half of 2023, and now we're looking for 2024 to really take off."
The housing market is about to exit its slowdown and take off in a new growth period, according to National Association of Home Builders CEO Jim Tobin.
He expects to see higher demand and construction in 2024 – a turnaround after the last few years were marked by low inventory and anemic activity.
"I think we're heading towards a housing renaissance. I think 2024 is shaping up to be that pivot year where we leave the doldrums of the post-COVID slowdown and we really pivot into the next five or six years of the housing market where we're going to see some great growth," Tobin said in an interview with Yahoo Finance on Thursday. "I'm very optimistic."
Homebuilders have been a key source of new housing supply as high mortgage rates have kept many prospective sellers on the sidelines, limiting the inventory of existing homes.
But with rates now retreating, NAHB's sentiment index has surged. Meanwhile, home purchase mortgage applications soared 22% year over year in December, according to the Mortgage Bankers Association.
Housing permits also rose in December, up 1.9% from November and 6.1% from the prior year, according to US Census data. And while housing starts fell 4.3% on the month, they are up 7.6% from a year ago.
"We had some bigger numbers earlier in the late half of 2023 and now we're looking for 2024 to really take off," Tobin said.
Foot traffic in model homes has also risen in recent months, a possible sign that springtime homebuying will be especially strong this year, he added.
That's partly because mortgage rates have continued their steady decline in recent months. The 30-year fixed mortgage rate slipped to 6.60% last week, its lowest level since May 2023, according to Freddie Mac data.
Rates will likely continue to decline over the next six months, Tobin estimated. At the same time, prospective buyers are likely warming up to the new norm of 6% mortgage rates, and could be readying themselves to jump back into the housing market, he said.
"I think that the world is getting ready to realize that we're no longer going back to those 3%-4% mortgage rates. And there does need to be a generational shift here that mortgage rates in the 5 [percent range] over the long term are still really good low rates for a long-term investment like your home," Tobin said.
Other real estate economists have forecasted a slightly better year ahead for home-purchasing. Improving affordability conditions could cause home sales to jump 5% while home prices decline 1% in 2024, according to Redfin.