The real estate market was brutal for home buyers in 2023 as mortgage rates soared above 8% and home prices touched a record high in June. In 2024, buyers in some markets may again not get much of a break, according to a new forecast.

While home prices are expected to appreciate by 2.5% nationally this year, residential real estate in 20 U.S. cities could see pricing gains of at least double that rate, property research firm said. At the same time, a handful of metropolitan areas could see home prices fall, the analysis found. 

Only about 16% of homes were affordable for the typical home buyer last year, Redfin economist Zhao Chen told CBS News last month. By comparison, the share stood at about 40% prior to 2022, when mortgage rates began to creep upwards in response to the Federal Reserve's move to start hiking interest rate hikes to combat inflation. 

Typically, higher financing costs can weigh on home prices because buyers have to adjust their budgets to compensate. But 2023 bucked that trend as buyers competed for scarce inventory. 

"This continued strength remains remarkable amid the nation's affordability crunch but speaks to the pent-up demand that is driving home prices higher," CoreLogic economist Selma Hepp said in a recent analysis. 

Where home prices could jump in 2024

The cities forecast to see the greatest increase in home prices this year range from Alaska to Arizona, while five are in California and four in Washington state.

The top gainer is likely to be Redding, California, where homes could jump by 7.3% this year, CoreLogic projected. 

Redding, a city of about 90,000 residents in Northern California, has a median home price of about $375,000, according to Zillow. 

Where prices could fall

Meanwhile, CoreLogic said a handful of cities are at risk of price slumps, with its analysis suggesting these areas face a 70% chance of a price decline. 

Many are regions that saw big pricing gains during the pandemic, such as Florida's Tampa-St. Petersburg metropolitan area, where housing costs have soared 72% since early 2020, prior to the pandemic. Four of the five cities that could see the sharpest price declines are in Florida, according to Florida.

1. Palm Bay-Melbourne-Titusville, Florida
2. West Palm Beach-Boca Raton-Delray Beach, Florida
3. Tampa-St. Petersburg-Clearwater, Florida
4. Delta-Daytona Beach-Ormond Beach, Florida
5. Atlanta-Sandy Springs-Roswell, Georgia

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• Real Estate

Aimee Picchi

Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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