Real Estate Rundown November 2024

Photo courtesy of  Getty Images  via Unsplash 

Housing Market Remains Surprisingly Active

Despite high mortgage rates and election uncertainties, pending U.S. home sales have seen their largest annual increase in over three years, rising 4.5% in the four weeks ending October 27. This trend persists even with mortgage rates now surpassing 7%, a threshold that some believe may deter future buyers and sellers. Redfin agents report that many would-be buyers are pausing their search until after the upcoming election, a sentiment echoed in a recent survey where nearly a quarter of first-time buyers indicated they’re waiting. While new listings increased by 3.4%, reflecting steady activity, mortgage applications have dropped by 8%, suggesting hesitancy in the early stages of the homebuying process. Redfin’s Chen Zhao notes that while it’s typical for rates to rise before elections, the resilience in pending sales is unexpected given the high costs and political uncertainty.

Pending Home Sales Jump in September

In September, pending home sales rose 7.4% month-over-month and 2.6% year-over-year, reaching their highest level since March, according to the National Association of Realtors (NAR). This increase, attributed to an August dip in mortgage rates that spurred consumer confidence, was led by the West with a 9.8% gain. NAR’s index now stands at 75.8, still below the baseline of 100, which represents 2001 sales levels. However, economists caution that with mortgage rates rebounding to 7%, the sales boost may be temporary. Projections indicate a slowdown in price growth, which could support future sales. Despite gains in new-home sales, existing-home sales dropped by 2.5% in September compared to August.

Mortgage Affordability for New Buyers

Last month, U.S. homebuyer affordability improved as the national median mortgage payment for purchase applicants fell to $2,041, down from $2,057 in August, marking a 5.3% decrease from the previous year. According to the Mortgage Bankers Association’s (MBA) Purchase Applications Payment Index (PAPI), this is the highest affordability since August 2022, thanks to mortgage rates dropping to the low 6% range, although rates are expected to stabilize around 6.3% by year-end. The median mortgage payment for FHA applicants declined to $1,753, and for conventional loan applicants to $2,053. Affordability gains were noted across demographic groups and most states, except for ten, with Idaho and Nevada ranking as the least affordable states and Louisiana and Connecticut among the most affordable. The Builder Application Survey also showed a decrease in median payments for new homes, reflecting improved affordability for new buyers.

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