Available inventory of unsold homes rose by 1.8% this week. It’s quite clear that homebuyers have hit the brakes waiting to see if mortgage rates recede from these multi-decade highs. The leading indicators for sales prices show that 2023 will end with home price gains of 1-2% over 2022, but the 2024 outlook is weakening and depends on your view of mortgage rates in Q1 and whether home prices will appreciate next year.
Here are some of the takeaways:
- There are now 546,000 single-family homes on the market — 3.5% fewer than last year.
- Inventory is climbing more quickly now than last year. Will we see inventory growth YoY by November? Note the inventory climb is not from sellers. There were only 57,000 new listings plus another 10,000 immediate sales. 5% fewer sellers each week than last year.
- There are only 326,000 single-family homes in the contract pending stage. That’s just a fraction fewer than last week.
- There are 7% fewer sales now than last year.
- 52,000 new contracts for single-family homes this week. There’s no sign of the sales rate improving until mortgage rates move.
- Some 38.2% of the homes on the market have taken a price reduction. That’s a 30 basis- point increase from last week. Maybe peaking for the fall?
- Price cuts now bode slightly bearish for sales prices in the future. Normally we’d have 35% or fewer price reductions this time of year. Still, this leading indicator was worse last year and pointed to the slight year-over-year sales price declines we saw in Q1 2023.
- The median price of single family homes in the US is $439,000. That’s basically unchanged from the last few weeks. Inching lower for the fall.
The leading indicators for home prices in 2024 are weakening. So, unless you expect mortgage rates to fall in Q1, factor in these slowly deteriorating price trends into your home price appreciation hypothesis for next year.
Homebuyers hit the brakes, causing unseasonal growth in inventory