As we close out 2024, the housing market is witnessing a significant increase in supply, with active listings in November rising by 12.1% compared to the same month last year. According to Redfin, this surge marks the highest volume of listings since 2020. However, despite the apparent abundance of homes available for sale, many properties remain untouched, lingering on the market for extended periods. Alarmingly, more than half of these homes—54.5%—have been listed for over 60 days, the highest percentage noted for a November since 2019. This trend suggests that while the market has more options available, it also highlights a growing issue of inventory that is either unattractive or mispriced.
Despite the increase in available homes, the reality of the market is nuanced. The typical time a property spends on the market before securing a contract stands at 43 days, the slowest pace for November in four years. Redfin agent Meme Loggins’ observations shed light on the current dynamics at play—homes that are well-priced and in good condition tend to sell quickly, often within three to five days. Conversely, properties that are overpriced remain stagnant for months, indicating that price perception is central to the buying process. This disparity suggests that buyers are discerning and more cautious with their investments, likely due to a lingering uncertainty tied to the economy.
A significant factor influencing buyer behavior has been the recent mortgage rates, which surged past 7% in October, a peak that has persisted into the year’s end. Despite these elevated rates, national home prices continue on an upward trajectory, with the S&P CoreLogic Case-Shiller index indicating a 3.6% increase in October compared to the same month a year prior. This persistent rise in prices against the backdrop of high borrowing costs complicates the decision for prospective buyers. Lawrence Yun from the National Association of Realtors notes that consumers have adjusted their expectations regarding mortgage rates, recognizing that they must navigate this new normal. The appetite for new listings appears to be revitalizing the market; however, buyers are now equipped with better negotiating power as the market gradually shifts away from sellers’ dominance.
Even with heightened inventory and a resurgence in pending home sales—the highest in nearly two years—the outlook remains challenging. Potential buyers are hesitant, often choosing to remain renters due to sustaining high prices and the associated costs of moving and engaging brokers. Additionally, the “seller lock-in effect,” where homeowners are reluctant to sell their properties and give up their favorable mortgage rates, has started to ease. This hesitation stems from various life circumstances that compel homeowners to sell, yet the predominant reason remains the fear of financial loss in a fluctuating market.
As we look ahead to the new year, the combination of elevated mortgage rates and rising home prices signals a precarious landscape for the housing market. The current scenario reveals that while demand exists, it’s tempered by buyers’ wariness of costs and inflationary pressures, which have driven ownership expenses to unprecedented highs. Without significant shifts in interest rates or housing prices, a rejuvenation in market activity may prove difficult.
While the end of 2024 brings promising enhancements to housing inventory, crucial challenges persist. Buyers are becoming savvier, expectedly pushing for better prices while navigating a complex financial environment. The market may recognize a shift in power dynamics, but the overarching effect of affordability and value perception will remain defining factors as we transition into 2025.