There’s good news on the horizon for homebuyers.

Redfin predicts home prices will fall and new listings will rise in 2024, following several years of escalating prices and mortgage rates that have pushed homeownership out of reach for many Americans.

“We’re starting to see signs of a shift toward a buyer’s market as pandemic-driven inflation takes its last gasps, mortgage rates come down and more people list their homes for sale,” Redfin said in its forward-looking analysis of the 2024 housing market. “We expect these trends to continue in the new year.”

While home prices at the end of 2023 are up about 3% compared with a year ago, Redfin predicts they will fall 1% in the spring.

The dearth of new listings prompted by pandemic-era low mortgage rates will also turn a corner. Redfin predicts the supply of houses will increase faster than demand, based on a recent double-digit increase in homeowners that have contacted Redfin to help sell their homes and a slight drop in requests from buyers.

Redfin expects the biggest home price declines in coastal Florida, where prices soared during the pandemic and where increasing risk from climate disasters is making homeowners' insurance more expensive. It expects prices to increase in more affordable metro areas that are more climate resilient, including Albany, N.Y., and Grand Rapids, Mich.

The combination of increased supply and lowered demand will propel home sales to increase 5% by the end of 2024, as buyers accept the reality that mortgage rates will decrease but won’t fall to prepandemic levels anytime soon. Redfin expects home sales will accelerate throughout 2024 and that 4.3 million homes will change hands next year.

Redfin expects mortgage rates will decline throughout 2024, dropping from 7% in the first quarter to 6.9% in the second quarter, 6.7% in the third quarter and 6.6% by the end of the year, following Federal Reserve rate cuts that are likely to begin next summer.

Homebuyers could see out-of-pocket fees decline as well, as real estate agents discount their commissions. Redfin anticipates more homebuyers will also work directly with a home’s listing agent instead of an exclusive buyer’s agent, potentially saving thousands of dollars in fees that would otherwise be paid to two agents.

For people who are still unable to afford a home, Redfin expects demand for large apartment and house rentals will increase in 2024, as Millennial and Gen Z buyers embrace renting and invest their money in other ways. Many other priced-out young people, some with children, will choose to live with their parents.