Hello! Welcome back to Flight School – Aerial View, where we take a quick look at the latest market updates.
Each week, we gather and summarize data from the leading analysts and economists in the real estate industry to provide you with a snapshot of what’s happening in four important topics: mortgage rates, inventory, demand and pricing. Below are some key insights for the week of November 13th, 2023.
Starting with mortgage rates, where this week the 30-year fixed average was around 7.4%. Mortgage rates should continue to tick slightly lower as we close the week because the 10-year Treasury yield dipped today after jobless claims were reported to have increased this cycle. Most economists continue to back their predictions from the last few weeks that mortgage rates have finally peaked. While cuts aren’t coming in the near term, neither is a world where we’re back above 8%. If rates stay steady through the holidays that bodes well for an increase in sales activity come January.
Shifting to inventory. It appears we have finally topped out for the year following the late season growth we experienced due to the recent surge in interest rates. This week there were 567,000 single family homes on the market, and we are now at the same level of homes on the market that we had at this time last year. With inventory finally having peaked, we will now see a typical seasonal decline through the holidays. Inventory looks to be on pace to finish the year with slightly more homes on the market than at the end of 2022.
Now for our third topic, demand. There are signals to pay attention to in near term sales data that will determine where the supply and demand dynamic goes for the remainder of the year and into 2024. For example, the percentage of new listings that get sold immediately. This week we’re seeing more supply coming onto the market, but also more homes going into contract immediately.
Another way to look at demand is the new pending sales rate. This week we had 52,500 single family homes go into contract. All year long we have been running at fewer than last year, but that recently flipped and we now have slightly more sales – – this trend line is not yet consistent enough to categorize it as sales growth, but it does bode well for sales in 2024.
And lastly, pricing, where it appears price reductions have also topped out for the year. Currently 39.2% of homes on the market have reduced their original list price, reflective of weak buyer demand, but this is still fewer than this time last year. There isn’t much of a signal in the data that shows prices will fall like they did a year ago. That’s because while rates are higher now than they were last year, they were shifting more rapidly last year than they are now. This translates to the median price of a single family home being $430,000 – a few percent higher than a year ago. Currently there are no signals of home price strength through the end of the year. There is the expectation that home prices will increase, potentially significantly, in 2024, if mortgage rates begin to drop around Q2 as predicted because inventory will continue to be very limited.
WRAP UP
That’s it for this week, be sure to check in next week for another market snapshot! And as always, reach out now to learn even more about how Flyhomes can help you on your home buying and selling journey.
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