Weekly Real Estate Monitor for April 22-26

Due to last week's economic updates, this week's economic update mortgage applications have declined, with interest rates starting the week at 7.43% and at 7.52% as of yesterday. However, even with rates in the 7.5% range, pending home sales have increased, GDP growth has fallen below expectations, and personal consumption expenditure has risen.

For spring homebuyers, it suggests that the expected significant downward shifts in mortgage interest rates are unlikely in the short term, as well as shows that buyers are still out and competing for homes, making low inventory a consistent obstacle.

It also brings truth to the reality of any home purchase or sale, which underlines the fact that home buyers move when life changes happen and not solely based on rate or home price fluctuations.

Spring New Home Sales Resilient Despite Higher Rates

In February, existing home sales saw robust growth while new home sales experienced a slight decline. However, the trend reversed in March. The U.S. Census Bureau and the Department of Housing and Urban Development reported that newly constructed homes sold at a seasonally adjusted annual rate of 693,000 in March, up from 668,000 in February. Meanwhile, the National Association of Realtors® (NAR) noted a decrease in existing home sales from 4.38 million units in February to 4.19 million in March.

NAR Chief Economist Lawrence Yun attributed the stagnant home sales to the lack of significant movements in interest rates. He noted that despite rebounding from cyclical lows, there are still more aspiring homebuyers in the market given the nearly six million more jobs compared to pre-COVID highs.

Affordability of Housing Declines in February 2024

The National Association of Realtors® (NAR) issued a report summarizing existing home sales data, revealing a 4.3% decline in housing market activity in March 2024 compared to February last year. March's existing home sales reached a seasonally adjusted annual rate of 4.19 million, marking a 3.7% decrease from March 2023.

Regionally, all four areas experienced price growth in March compared to a year ago. The Northeast led with a 9.9% gain, followed by the Midwest with a 7.5% increase, the West with a 6.7% rise, and the South with a 3.4% uptick. Homes are taking approximately 33 days to go from listing to contract in the current housing market, up from 29 days a year ago.

Sales declined in all four regions in March compared to the previous year, with the South experiencing the largest drop with the Northeast having a 3.8% decrease. In comparison to February 2024, the Northeast region saw a 4.2% increase in sales, the highest of all in the nation.

In March, single-family sales decreased by 4.3%, and condominium sales dropped by 4.9% compared to the previous month. Year-over-year, single-family home sales were down by 2.8%, while condominium sales fell by 11.4%.

Weekly Highlights:

The median list price reaches an all-time high.

The median list price marked a new record high, representing an 8.7% increase from last year and a 1.1% uptick from just a week ago.

Active listings continue to rise compared to last year.

This spring has shown steady growth in active inventory compared to 2023, marking an 11.9% gain. Nevertheless, despite these increases, supply remains limited in most markets across the nation, especially in metro markets like New Jersey.

Price decreases are occurring more frequently compared to 2023.

More sellers are adjusting their asking prices downwards when needed. This week, 8.2% of active listings experienced a price decrease, marking a 1.5 percentage point increase compared to last year's figure of 6.7%. With mortgage rates in the 7+% range and list prices climbing, sellers modifying their prices is a strategic reaction to the buyer pool facing challenges entering the market.

Daily Rate Index