There is good news for the housing market as we close out 2024. This means that the supply has increased significantly. The bad news is that much of that supply is outdated and remains unsold for much longer than usual.
The number of active listings in November was 12.1% higher than in November 2023, reaching its highest level since 2020, according to a new report from Redfin.
However, more than half (54.5%) of those homes had been on the market for at least 60 days without a sales contract. This is the highest share for November since 2019 and is up nearly 50% year-over-year, according to the report.
The typical home that went under contract took 43 days to close, the slowest November pace since 2019, according to Redfin.
“Many of the properties on the market are obsolete or uninhabitable. There’s a lot of inventory, but I don’t think it’s enough,” said a Redfin agent quoted in the report. , Meme Loggins said. “I tell sellers that if a home isn’t priced right, it’s going to be put on the market. Homes that are well priced and in good condition can be off the market in three to five days; Homes that are too expensive can be left abandoned for more than three months.” ”
Mortgage rates rose more than 7% in October and remained at that level through the end of the year, according to Mortgage News Daily. Housing prices also continue to rise. Nationally, prices rose 3.6% in October compared to the same month last year, according to the latest monthly price report released Tuesday by S&P CoreLogic Case Shiller.
“With the latest data covering the pre-election period, our national indexes show continued improvement,” said Brian Luke, Head of Commodities, Real Assets and Digital Assets at S&P Dow Jones Indices. ” he said. “The removal of the risk of political uncertainty has led to a rally in the stock market. We’ll see if there is a similar sentiment among homeowners.”
According to the National Association of Realtors, pending home sales, which measure the number of existing home purchase contracts, rose both monthly and annually in November to the highest level in about two years. However, they were very slow off the base. Real estate agents claim that interest rates are now at a new normal.
“Consumers appear to be recalibrating their expectations regarding mortgage rates and taking advantage of more available inventory,” said NAR Chief Economist Lawrence Yun. “For the past 24 months, mortgage rates have averaged over 6%. Buyers are no longer waiting or hoping for mortgage rates to drop significantly. Additionally, the market has shifted from a seller’s market. Buyers are in a better position to negotiate.”
But the slowing pace of sales doesn’t bode well for the new year, especially as interest rates remain high. Another report from Redfin says that while there is still demand, renters are staying as renters longer because of rising home prices as well as rising agent and mover prices. .
CoreLogic’s year-end report found that the seller lock-in effect, in which some sellers are unwilling to trade in lower mortgage rates to move, began to ease in 2024, but it was largely due to life events. It is said that there was. or the need to utilize accumulated capital. Adding inventory didn’t have much of an impact on sales because costs got in the way.
“Buyers are struggling to keep up with home prices. The current cost of home ownership, adjusted for inflation, is at its highest level in decades. This sustained rise in prices and interest rates means that for the first time “This has created a difficult environment for buyers as well as those looking to move up the property ladder,” CoreLogic chief economist Thelma Hepp said in the report.
