Real Estate Rundown January 2024

Photo credit Andreas Rasmussen Via Unsplash

Pending Home Sales Fall Flat

Pending home sales in the United States remained flat in November compared to the previous month, according to the National Association of Realtors (NAR). The Pending Home Sales Index held at 71.6 in November, falling short of economists' expectations of a 1% increase. While sales increased in the Northeast, Midwest, and West, they dropped in the South, and year-on-year, pending home sales are down by 5.2%. The decline in mortgage rates over the past two months has sparked increased interest, though it has not yet translated into a significant rise in formal contracts, according to Lawrence Yun, NAR chief economist.

Home Prices Continue to cool down

U.S. home-price growth has slowed for the third consecutive month, with prices rising by 0.6% in November from the previous month, the smallest increase since June, according to Redfin's Home Price Index. The year-over-year increase was 6.4%. The report suggests that it's becoming a better time for homebuyers, as mortgage rates dropped below 7% for the first time since August, providing relief for buyers facing an historic shortage of homes for sale. The increase in new listings, rising pending sales, and a surge in homeowners contacting agents about listings indicate a more favorable market for buyers.

New Home sales had slid after a strong couple of months

In November, new single-family home sales in the U.S. dropped by 12.2% from October, totaling 590,000, but increased by 1.3% compared to November 2022, according to data from the U.S. Census Bureau. The median sales price for new houses sold in November was $488,900. The seasonally adjusted estimate of new houses for sale at the end of November was 451,000, representing a 9.2-month supply at the current sales rate. Despite a decline in new home sales, other indicators like increased existing home sales, higher homebuilder confidence, and a rise in housing starts suggested a robust housing market.

2024 Housing Market Trends

With home prices continuing to rise and inventory remaining tight, the 2024 housing market presents challenges for both buyers and sellers. The median sale price for existing homes in the U.S. was $387,600 in November 2023, marking five consecutive months of year-over-year increases. Mortgage rates, despite declining from recent peaks, are still relatively high at 6.88%, impacting affordability. Housing sales softened in 2023, but experts predict a potential rebound if mortgage rates continue to decrease. Housing inventory remains low, with a 3.5-month supply, prompting concerns about a seller's market persisting. Home prices are expected to rise around 3 to 4 percent in 2024, and inventory improvements may hinge on increased home construction and existing homeowners listing their properties.

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