Real Estate Rundown May 2024

Photo credit Mel Via Unsplash

New Homes Sales Exceeding Expectations

In March 2024, the housing market experienced a notable rebound in new home sales, surpassing expectations. The U.S. Census Bureau reported a total of 693,000 new single-family home sales nationwide, marking an 8.8% increase from the revised February rate and an 8.3% rise from March 2023. Despite a slight decline in median prices, with new houses selling at $430,700, demand remained strong, supported by favorable demographics and a robust labor market. This surge in sales contrasts sharply with the decline in existing home sales during the same period. Factors such as looser financial conditions and incentives from builders, including rate buydowns, have contributed to this uptick in new home sales, indicating a positive trend in the housing market despite challenges such as higher mortgage rates.

Mortgage Rates Setting New High for 2024

The mortgage market witnessed a significant surge, with rates climbing above 7% for the first time since December. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage reached 7.1%, prompting uncertainty among prospective homebuyers who must now decide whether to act quickly or wait in hopes of a future decrease. Despite the increase, mortgage applications for home purchases rose by 5% from the previous week, indicating a sense of urgency among buyers to secure loans amid rising rates. Jessica Lautz of the National Association of REALTORS® advises buyers to consider not only borrowing costs but also soaring home prices and intense market competition, suggesting that waiting may not necessarily lead to more favorable conditions.

Home Prices Soar Despite High Home Prices

In February 2024, the housing market continued to see robust demand and constrained supply, driving home values higher despite rising mortgage rates. According to the S&P CoreLogic Case-Shiller national home price index, home prices surged by 6.4% year-over-year, marking the fastest rate of growth since November 2022. Both the 10-city and 20-city composites showed significant annual gains, with cities like San Diego, Los Angeles, Washington, D.C., and New York reaching all-time highs. The Northeast region, encompassing cities like Boston, New York, and Washington, D.C., emerged as the best performing market, potentially fueled by a return to office amid remote work trends. Despite economic uncertainties, including rising mortgage rates and inflation, home prices have remained resilient, demonstrating the resilience of the housing market in the face of challenges.

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