NerdWallet 2024 Home Buyer Report

Mortgage rates and home prices are high, and the number of homes for sale is meager. The recent housing market has been bleak for buyers, and NerdWallet’s 2024 Home Buyer Report — the eighth of its kind — indicates that while some folks finished 2023 feeling discouraged, other would-be homeowners felt downright defeated.

Less than one-quarter (23%) of Americans who began last year with the intention of buying a home were successful (having purchased or in the process of purchasing) by year’s end, according to the NerdWallet survey conducted online by The Harris Poll in late November 2023. This is down from 34% two years ago, according to the 2022 report. As the longstanding aspiration of homeownership grew further out of reach during these past few years — due to unaffordability and a lack of houses for sale — it’s possible more would-be buyers don’t view homeownership as they once did. In fact, 64% of Americans say buying a home is not the measure of achievement it once was, according to the survey. And 56% of renters say they don’t think they’ll ever be able to afford homeownership.

The fact is, buying in 2023 was difficult. After a series of monthly declines, October marked the lowest number of annualized existing home sales in over 13 years, according to the National Association of Realtors. Still, in the face of adversity, at least some folks are hoping for improvements this year: 12% of Americans say they plan to buy in the next 12 months, according to the survey.

"2023 was terrible to home buyers, but 2024 will be better as mortgage rates fall and homes become more affordable," says Holden Lewis, NerdWallet home and mortgages expert. "Actually, 'less unaffordable' might be a better way to say it. Buyers will likely struggle to find affordable homes in 2024, but the homebuying experience might not be as miserable as in 2023."

Key findings

• 2023 buyers struggled to find success. More than three-fourths (77%) of Americans who began 2023 with the intention of buying a home fell short, an increase from 66% of unsuccessful would-be buyers in 2021. 

• Some buyer optimism seeps into 2024 home budgets. More than 1 in 10 (12%) of Americans say they plan to purchase a home in the next 12 months. On average, they hope to spend $274,800 — well under the national median sales price. 

• Overall, the current perspective is glum. About two-thirds (67%) of Americans say the housing market has never been worse for buyers than it is right now, and 64% of Americans believe a housing market crash is imminent in the next three years.

• More cite obstacles to homebuying in 2024 than years past. About three-fourths (74%) of Americans say something is preventing them from buying a home in 2024, up from 69% in 2023, 63% in 2022 and 61% in 2021 and 2020.

• The current market could have lasting impact. Nearly two-thirds (64%) of Americans say buying a home is not the measure of achievement it once was, and 54% of Americans say there is too much pressure to own a home in the U.S., a sentiment more commonly felt among younger generations. 

Looking back at 2023

As of Jan. 1, 2023, some 21% of Americans were hoping to purchase a home during the year, according to the survey. By the end of the year — Nov. 28-30, when our survey took place — 77% of those homebuying hopefuls had fallen short. That’s compared with 70% when we asked last year about 2022 buyers, and 66% when we asked about 2021.

Buying a home has proven increasingly difficult over the past few years. Average rates on a 30-year fixed mortgage topped out at about 7.8% in late October. Affordability, high rates and lack of inventory topped the reasons these would-be buyers fell short in 2023.

“There wasn’t a whole lot working in favor of home buyers this past year,” Lewis says. “Many opted out entirely due to high rates, but those who stuck it out faced tough competition in the face of depleted inventory.”

Home buyer tip: Many of the same homebuying challenges in 2023 will remain this year. Even if more homes are listed, it’s unlikely to be enough to warrant falling prices. Buyers in 2024 should prepare for another tough environment. Lower mortgage rates as the year progresses may make home payments more affordable, but they may also usher in greater competition.

Buying and budgets in 2024

Despite the tough 2023 market, at least some Americans may think their chances will improve this year: 12% of Americans plan to purchase a home in the next 12 months, according to the survey, and many of them (63%) hope to spend under $300,000, a lofty aspiration that may only be possible in the most affordable areas.

Americans planning to purchase a home in the next 12 months hope to spend $274,800, on average, or a median of $200,000. For context, the median price of existing homes sold in November, when the survey was fielded, was nearly $388,000, according to the National Association of Realtors. Nationwide, typical existing home prices have climbed more than 50% over the past five years, according to data from NAR. And it could be that some would-be buyers’ expectations have yet to catch up.

Plans to buy are more likely to be shared among younger generations and those who live in urban areas:

• 21% each of Generation Z (ages 18-26) and millennials (ages 27-42) plan to buy a home in the next 12 months, compared with 9% of Generation X (ages 43-58) and 4% of baby boomers (ages 59-77). 

• 19% of urban Americans plan to buy a home in the next 12 months, compared with 10% of suburban and 8% of rural Americans. 

However, at least some of this year’s buying hopefuls may be underprepared. Only 31% of those planning to buy in the next 12 months have started a down payment fund.

Home buyer tip: “Planning to buy and actually laying the foundation to make buying possible may be two very different things,” Lewis says. “A down payment, for example, can take years to amass. People hoping to buy this year or even within the next several years could benefit from strategic saving and keeping tabs on their credit long before they begin home shopping.”

Current reads on the housing market

Many Americans recognize that buying a home now could be a challenge. In fact, about two-thirds of Americans (67%) say it’s never been worse for buyers than it is right now, according to the survey. This sentiment is felt most strongly among the youngest generations: 74% of Generation Z say the housing market has never been worse for buyers than it is right now, compared with 71% of millennials, 66% of Gen X and 60% of baby boomers.

Younger generations have a unique perspective. For example, two-thirds of Americans (66%) believe current mortgage rates are unprecedented (“have never been what they are now”). More than three-quarters of Generation Z (77%) agree with this statement, 72% of millennials, 69% of Gen X and 53% of baby boomers. At the time of our survey, the average rate on a 30-year fixed mortgage was about 7.2%. That rate last broke 8% in 2000; it was over 10% a decade earlier, and peaked at over 18% in 1981.

When things feel bad, it’s not difficult to imagine them getting worse. Nearly two-thirds (64%) of Americans believe a housing crash is imminent within the next three years, and fewer than half (45%) say buying a home in the current market is a smart investment.

"A lot of people might be hoping for a housing crash, in which homes lose much of their value," Lewis says. "A crash would suddenly make homes affordable for a lot of people who have been priced out. But a crash is unlikely anytime soon. We’re more likely to see ongoing discomfort in the form of sustained high prices and a lack of inventory."

Current buyer roadblocks

There can be many obstacles on the path to homeownership, and 74% of Americans say something is preventing them from pursuing homeownership or buying a new home in 2024, according to the survey. This has grown from 61% when we asked in the 2020 and 2021 Home Buyer Reports.

Just what those obstacles are varies between nonhomeowners and current owners. The top-cited obstacle for nonhomeowners is the increasingly high cost of living (inflation), where the top obstacle for current homeowners is mortgage rates.

Nearly half (45%) of nonhomeowners say that not having enough money saved for a down payment is holding them back. A bigger down payment can translate to a smaller and more affordable mortgage, but there’s evidence some nonhomeowners may be setting their sights unnecessarily high. Nearly three-quarters (72%) of renters say a 20% down payment is required to buy a home, when in fact there are several options available for lower-down-payment mortgages.

Home buyer tip: First-time home buyers may be eligible for programs that ease some of the traditional obstacles to homeownership. Those hoping to become homeowners for the first time may qualify for mortgages with less stringent standards and down payment assistance.

Changing buyer sentiment

A failed attempt to purchase a home or a market that’s very unfavorable to buyers may have lasting impact. Nearly two-thirds (64%) of Americans say buying a home is not the measure of achievement it once was, an increase from 60% last year.

Further, feeling like you’re at the age where you should buy a home, given cultural norms and traditions, can be a source of stress when buying a home is far easier said than done. Over half (54%) of Americans say there is too much pressure to own a home in the U.S., a feeling most shared by the youngest — 60% of Generation Z, 60% of millennials, 56% of Gen X and 46% of baby boomers agree with this sentiment.

Not everyone wants to buy a home, though. Some Americans who rent (37%) say they plan on doing so forever. At least a share of renters are OK with that — 55% of renters say they prefer renting to all the expenses and effort of homeownership. Yet some may be resigning themselves to it — 56% of renters don’t think they’ll ever be able to afford homeownership.

What it would take for more buyers (and sellers)

A persistent lack of inventory has driven sustained high prices, even as demand was falling last year due to higher mortgage rates. So what would it take to turn this ship?

“Though new home construction is going strong, it would take a significant number of current homeowners selling their homes in pursuit of another to increase inventory in a meaningful way,” according to Lewis.

Unfortunately, some of the things that current owners say would motivate them to buy another home in 2024 are the very things that could depend on homeowners selling — 29% of current owners would buy in 2024 if prices came down, 27% if the “right” home came along and 11% if more homes were listed.

Lower mortgage rates, which are not dependent on home inventory, could tip some homeowners into the market, thereby increasing inventory as they sold their current homes: 6% of homeowners could be motivated to buy another home in 2024 if rates fell below 7%; a total of 11% if rates fell below 6% and 26% if rates went under 5%.