Real Estate Rundown June 2024

June 01, 2024

Photo Credit Ilse Orsel via Unsplash

Could The Market Be Balancing To A Buyer’s Market

The real estate market is currently leaning towards a seller's market, but it is moving towards a more balanced state, according to Margaret Heidenry's article. Despite high mortgage rates and increased housing supply, sellers still hold a slight advantage. This shift towards balance is marked by a four-month housing supply, the highest since March 2019. However, the overall housing supply remains significantly below pre-pandemic levels. The situation is complex for sellers, who face higher listing prices and mortgage rates, making the decision to sell challenging. While the market data suggests a move towards equilibrium, consumer confidence remains conflicted, contributing to the sense of market "purgatory."

April 2024 Home Sales Weak Due to High Mortgage Rates

In April 2024, existing home sales dropped by 1.9% to a seasonally adjusted annual rate of 4.14 million, continuing a decline driven by rising mortgage rates. This rate was also 1.9% lower compared to April 2023, though it was a slight improvement from the 3.7% year-over-year decrease seen in March. Housing inventory increased to 1.21 million units, a 16.3% rise from the previous year. Despite these trends, the median sales price rose to $407,600, up 5.7% from last year. Zillow's Senior Economist, Orphe Divounguy, notes that while more sellers are entering the market, higher mortgage rates have deterred buyers, although recent rate decreases might prompt a rebound. The inventory has grown, leading to potential price moderation, but competitively priced homes are selling quickly, with average sales taking just 13 days. This situation presents an opportunity for builders to attract buyers with incentives like rate buy-downs.

Mortgage Rates Fall Below 7%

In a welcome development for home buyers, mortgage rates have dipped below 7% for the first time in a month, with the 30-year fixed-rate mortgage now averaging 6.94%. This decline reduces borrowing costs, potentially spurring more buyers into the market. For instance, the monthly mortgage payment on a median-priced existing home of $407,600 would be $2,156, and $2,293 for a new home priced at $433,500. The decrease in rates, along with an increase in new listings, is a positive sign for the housing market. Despite this, affordability issues persist, with high rates still deterring many potential buyers. Existing-home sales fell by 2% in April, and new-home sales are also down by nearly 8% year-over-year. However, the moderation in rates and limited inventory might boost new-home sales during the crucial spring-summer season.

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