The housing market has experienced a remarkable trend recently, with the median home sale price reaching new heights for the ninth consecutive week. This impressive growth, driven by various factors, provides a complex yet fascinating snapshot of the current state of the real estate market. Here are the latest trends.
Current Trends in Home-Sale Prices
According to Redfin, as of the four weeks ending July 7, the median U.S. home-sale price reached an all-time high of $397,482, marking a 4.7% increase compared to the previous year. This surge represents the most significant growth in over four months. Despite elevated mortgage rates suppressing homebuying demand, sale prices have remained persistently high. The market’s dynamics have led to pending home sales dropping by 3.5% year over year and mortgage-purchase applications falling by 13%.
Factors Contributing to High Prices
Several factors contribute to the sustained high prices in the housing market:
- Low Inventory: Inventory levels have historically been low, which has helped maintain high prices. Although inventory is rising year over year, it remains at a historically low level.
- Lagging Indicators: Final sale prices often reflect deals made a month or two earlier, indicating that the current high prices are a result of past transactions.
- Elevated Mortgage Rates: High mortgage rates have decreased homebuying demand, yet prices have stayed high due to limited supply.
Signs of Slowing Price Growth
Despite the recent record highs, there are indications that price growth may soon decelerate:
- Homes Selling Below List Price: The typical home is selling for 0.4% less than its asking price, a trend not seen since the start of July 2020.
- Reduced Sales Above Asking Price: Only 32% of homes are selling above their asking price, down from 36% a year ago, the lowest share at this time of year since 2020.
- Increased Inventory: New listings are up 7.3% year over year, and the total number of homes for sale has increased by 18.3%. More than 60% of these homes have been listed for at least a month without going under contract.
Market Dynamics and Buyer Behavior
Mortgage rates have remained significantly higher than pandemic-era lows for nearly two years, prompting many sellers to list their homes despite the high rates. This increase in inventory has led to homes sitting on the market longer than usual. Buyers have become more selective, often backing out or negotiating prices down for even minor issues. As Julie Zubiate, a Redfin Premier agent in the Bay Area, notes, “Homes are sitting longer than they usually do this time of year, which has led to some—but not all—homes selling for a little bit less.”
Segments Still Thriving
Despite the general trend of homes sitting longer on the market, there is still a segment that is performing exceptionally well. Move-in ready homes with large backyards in desirable school districts continue to attract multiple offers and often sell above the asking price. This indicates that while the overall market may be cooling slightly, certain properties remain highly sought after.
Housing Market Highlights: Four Weeks Ending July 7, 2024
Redfin’s national metrics provide a comprehensive overview of the housing market, including data from over 400 U.S. metro areas. This information is based on homes listed and/or sold during the specified period. Weekly housing-market data goes back to 2015 and is subject to revision. Here are the key highlights for the four weeks ending July 7, 2024:
- Median Sale Price: The median sale price reached $397,482, marking a 4.7% year-over-year increase. This is an all-time high and the biggest increase in four months.
- Median Asking Price: The median asking price was $406,000, reflecting a 5.4% year-over-year rise. Despite the increase, this is the lowest level in three months.
- Median Monthly Mortgage Payment: The median monthly mortgage payment stood at $2,742 with a 6.95% mortgage rate, a 5.3% increase year-over-year. This is $95 below the all-time high set during the four weeks ending April 28.
- Pending Sales: Pending sales totaled 83,410, which is a 3.5% decrease year-over-year.
- New Listings: New listings amounted to 93,452, showing a 7.3% increase year-over-year.
- Active Listings: The number of active listings reached 970,503, an 18.3% year-over-year increase. This is the smallest increase in over two months.
- Months of Supply: The months of supply was 3.6, up 0.8 points year-over-year. A balanced market typically has 4 to 5 months of supply; thus, the current figure indicates seller’s market conditions.
- Share of Homes Off Market in Two Weeks: Approximately 41.1% of homes were off the market within two weeks, down from 45% a year ago.
- Median Days on Market: The median days on market was 32 days, an increase of 4 days year-over-year.
- Share of Homes Sold Above List Price: Only 31.9% of homes were sold above their list price, down from 36% a year ago.
- Share of Homes with a Price Drop: The share of homes with a price drop increased by 1.8 points to 6.5%.
- Average Sale-to-List Price Ratio: The average sale-to-list price ratio was 99.6%, down 0.4 points year-over-year.
Conclusion
The current housing market presents a mixed picture. While home-sale prices have hit record highs for nine consecutive weeks, signs suggest that this trend may not continue indefinitely. Rising inventory, homes selling below list price, and a more selective buyer base indicate potential shifts in the market. However, certain segments, such as move-in ready homes in prime locations, continue to thrive. Sellers need to adapt to these evolving conditions, ensuring their homes are well-prepared, accurately priced, and effectively promoted to attract the right buyers.
ALSO READ: