Following months of cooling inflation, higher rent and food prices pushed the inflation report to a 3.4% annual rate, according to the latest Consumer Price Index report. The rise indicates the Fed's ongoing challenge to achieve a 2% target inflation rate may experience some fluctuations along the way.

In December, the Fed set the housing market abuzz with hints of interest rate cuts in 2024. Given inflation's bumpy ride, borrowers may need to wait until later in the year for rate cuts, if they come at all.

Although the Fed doesn't set mortgage rates, it does set the federal funds rate—the rate at which banks lend money to each other overnight. Mortgage rates indirectly tend to rise and fall in anticipation of the Fed's interest rate moves.

Inflation, interest rates and other economic factors will undoubtedly impact U.S. homebuyers, who are trying to read the tea leaves and game plan for buying a house. Will 2024 be a better or worse year for homebuyers? We asked several real estate experts and professionals to provide their expert opinions on buying a home in 2024.

If you're considering buying a home then start by seeing what mortgage rate you could qualify for here.

Why 2024 will be a better year for homebuyers

"2024 is bound to be a better year for homebuyers, if only because of how terrible 2023 was," says John Graff, CEO at Ashby & Graff Real Estate.

Graff anticipates falling interest rates and increasing inventory could result in more opportunities for homebuyers in the months ahead. "As rates slowly come down from highs not previously seen in decades, more and more housing inventory will open up as on-the-fence sellers start to list their homes—giving buyers some more options in an otherwise tight market," he notes.

"Even though interest rates aren't back at the historic lows they once were at during and after the pandemic, the fact they have pulled back from recent highs will surely entice new entries to the market," Graff says.

Even if the Fed does follow through on promises of rate cuts, they likely won't bottom out to the historically low rates of 2020 and 2021 anytime soon. That's a probability many experts like Lisa Simonsen, a Douglas Elliman Real Estate broker, are reminding borrowers of.

"2024 will be the year buyers begin to adjust to the new realities of the market," Simonsen notes. "Mortgage rates may feel high, but 6% or higher has been the general average mortgage rate in every decade aside from the years following the 2008 recession. Rates of 3% to 4% are the exception, not the rule."

Still, Simonsen anticipates more homebuying activity if mortgage rates fall. "The housing market is currently constrained by a lack of inventory. Lower rates will spur home sales and add much-needed inventory, leading to more transactions."

Start exploring your homebuying options here today.

Why 2024 may not be a better year for homebuyers

Of course, homebuyers waiting for lower home prices and better financing options may find complications in 2024. Lower rates could lead to more competition and higher prices.

Michelle Mumoli, a broker-salesperson with New Jersey-based Compass, recently shared her insights on the evolving housing market and pointed to insufficient inventory and anticipated rate declines as factors continuing to drive up housing prices. "The lower interest rates have already brought buyers back into the market and have created much higher competition on homes, essentially raising home sale prices."

Low inventory is the bottleneck stifling a favorable market for homebuyers, which, as Simonsen notes, could take time to overcome. "Housing sales are expected to increase a bit this year, but inventory will remain comparatively low. Overall, we will continue to see a seller's market, particularly for homes that need little or no renovation work. These market trends will take some time to develop—rates never decline in a straight line—with incremental decreases over the next several years."

The bottom line

In some scenarios, it may make sense to buy a home now despite elevated mortgage rates. As the saying goes, "date the rate, marry the house." In other words, if you have the means to purchase a home now, it may be worth it since home prices generally rise over time, and you can refinance your home loan when mortgage rates drop in the future.

Regardless of what's going on with home prices and interest rates, buying a home is one of the most important decisions most Americans make. As such, it's essential to carefully consider your budget compared with the ongoing costs of owning a home, including your mortgage, taxes and maintenance costs. Calculate your monthly income and expenses to determine what you can afford. It's also wise to get pre-approved for a mortgage to help you understand your financial limits before you begin house hunting.