Weekly Real Estate Monitor for Jan. 8-12

Mortgage interest rates continue to remain stable in the new year, starting the week at 6.72% and at 6.74% as of yesterday. Rates have been holding steady since December 21 which has helped potential home buyers make informed plans as they enter the real estate market, and ensure that the homes they consider are well within their anticipated price range without the expectation of significant fluctuations.

With expectations of mortgage interest rates anticipated to decrease further throughout the year due to satisfactory consumer inflation reports, more buyers are expected to enter the market between now and the Spring. However, like everything, there are pros and cons, and lower rates could lead to increased competition and intensified bidding as limited housing inventory is and has been an ongoing issue. Even when rates were higher in 2023 and there were fewer buyers, the primary challenge for home buyers was finding the right home.

Consumer Inflation Report Update

In December, consumer price inflation increased by 3.4%, slightly surpassing the 3.1% recorded in November. However, the overarching trend indicates a more subdued inflation environment compared to 2022. Despite these figures, the Federal Reserve's expectations to reduce interest rates by at least three times this year remain unchanged at this time.

A significant factor, housing rent, is also exhibiting a more stable trend. This is reflected in the key core inflation, which excludes the volatile energy and food components, experiencing a modest 3.9% annual gain – its smallest increase in nearly three years.

Given the Federal Reserve's emphasis on "core" inflation, there is potential for a more assertive approach in lowering interest rates later in the year, particularly if rent continues to show signs of cooling in the coming months – a possibility indicated by the ongoing apartment construction boom. It's important to note that home prices are not factored into consumer price inflation. However, an improvement in housing affordability could be achieved if mortgage rates decline.

Weekly Highlights:

Following a three-week hiatus, there was a noticeable surge in list prices.

Prices on the market experienced a notable surge following a three-week hiatus. After remaining constant at $350,000 for three weeks, there was an abrupt 8.6% increase, bringing the median list price to $380,000. In comparison to the same period last year, the median list price in the Bright MLS service area has risen by 4.0%

The initial week of 2024 shows an increase in new listings hitting the market.

The initial week of 2024 saw a significant influx of new listings, a marginal 3.4% decrease compared to the first week of 2023. Impressively, the number of new listings almost doubled, witnessing a remarkable 95.3% increase from the previous week. Part of this data is influenced by listing agreements expiring towards the end of the year and being re-listed as new listings.

The pace of home sales has accelerated compared to one year ago.

Homes are now selling at an accelerated pace compared to a year ago. The median time to contract, concluding on January 7, was 31 days, indicating that half of the homes secured a contract within a month or less. Although this is one day slower than the previous week, it is notably 5 days quicker than the corresponding period last year.