​​Top 10 Housing Markets With the Most Pent-up Demand

Estimated reading time: 3 minutes

The U.S. housing market experienced a major slowdown in 2023 as the Federal Reserve raised interest rates to help curb inflation. In response, mortgage rates exceeded 7.5% for the first time in decades, forcing many buyers out of the market.

Signs of Recovery

Despite last year’s downturn, a report by the National Association of REALTORS® (NAR) projects the housing market will begin to recover in 2024, listing 10 cities where pent-up demand is expected to spur an increase in activity. America’s Sun Belt, the Southeast and Southwest of the nation, which saw a growing stream of migration and corresponding housing demand over the past few years, is featured prominently, but not exclusively on the list. Here are the cities with the most pent-up demand:

1. Austin, TX
2. Dallas, TX
3. Dayton, OH
4. Durham, NC
5. Harrisburg, PA
6. Houston, TX
7. Nashville, TN
8. Philadelphia, PA
9. Portland, ME
10. Washington, DC

The Keys That Will Open More Doors

So what do these cities have in common? The NAR report shows they share several key indicators that signal pent-up demand compared to the national average.

• More return buyers: Mortgage rates are expected to fall this year as the Fed begins to cut interest rates, which is expected to offer some relief to prospective homebuyers who were previously forced out of the market.
• Lower price appreciation: The metro areas with the lowest price appreciation in 2023, are projected to experience significant price appreciation in 2024 due to pent-up demand.
• Affordability: Markets with the largest number of renters who can afford to buy will likely see increased activity. NAR calculated this by looking at the largest 100 metro areas and the number of renters able to afford a median-priced home, assuming a 10% down payment.

More potential sellers: As mortgage rates rose in 2023, many potential sellers took a step back to avoid a higher rate home loan on a new home. With rates expected to drop this next year, return sellers will re-list their homes and new sellers will enter the market.

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