The U.S. housing market is showing signs of positive movement, but it’s also fraught with contradictions and challenges as September 2024 came to a close. On one hand, pending home sales witnessed their largest monthly increase since January 2023, jumping 2.5% month over month. This surge is attributed to lower mortgage rates, which are now at their lowest point in two years, along with the Federal Reserve’s decision to cut interest rates. On the other hand, existing home sales plummeted, falling to record lows aside from the beginning of the pandemic, indicating the market remains complex and unstable.
According to Redfin, the technology and data-driven real estate brokerage, pending home sales rose 3.1% year over year, making it the highest annual increase since May 2021. This increase reflects how some buyers are finally stepping back onto the field, taking advantage of improved mortgage conditions. After all, with the average interest rate for 30-year mortgages sitting at around 6.44%, it’s markedly low compared to the above 7% rates from the previous year.
Despite these encouraging statistics, existing home sales illustrated contrasting trends. They fell month over month by 0.5% and year over year by 3%. This decline translates to a seasonally adjusted annual rate of approximately 4,023,067 units sold, marking it as one of the lowest figures recorded since the pandemic’s onset. The numbers indicate underlying issues as both buyers and sellers navigate the current financial climate with caution.
Particularly concerning is the devastating impact of storms, with Florida facing harsh consequences from hurricanes. The hurricanes have had tangible effects on home sales, as many properties suffered damage, and sellers pulled listings from the market due to repair needs. MaryDell Penney, Redfin’s market manager based in Orlando, Florida, pointed out the storm-induced changes, explaining delays on closings as post-storm reinspections became mandatory requirements for financing.
While conditions shifted somewhat favorably for potential buyers, many are still facing significant hurdles. For those hoping for dramatic price drops, the market might disappoint. The median sale price climbed to $428,212, increasing 3.9% from the previous year, even though it decreased slightly by 1.1% compared to the month prior. Supply constraints continue to play a role, exacerbated by low inventory levels and rising costs associated with maintaining homes.
The dynamics of the housing market have caused shifts even at the national level. The Northeast showcased impressive growth, with housing starts soaring by 77% year over year—this rapid increase juxtaposes more subdued growth elsewhere, as the Midwest saw only 3.5% growth, the South at 1.9%, and the West showing marginal drops.
Building permits and housing starts present another layer of complexity. Despite the overall dip of 0.5% for housing starts, single-family homes recorded solid momentum with starts rising 2.7% month-over-month. Wells Fargo’s research indicated optimism around single-family construction arising from the onset of the Fed's rate easing. Builders seem to hope this trend will continue, but multi-family projects remain stalled due to high vacancies and tightened credit access.
The nuanced realities of these shifts beg the question: how will future months play out? Elijah de la Campa, Senior Economist at Redfin, remains hopeful yet cautious, expressing the unpredictability of the housing sector amid high-stakes economic factors like the upcoming jobs report and potential impacts from political events. His advice for buyers? Don’t try to time the market. Instead, he suggests if you find something you love at the current rates, it might be worth acting sooner rather than later.
Another notable trend showing through the numbers is the shift how long homes are sitting on the market. Homes sold last month lingered for an average of 39 days, indicating buyers are taking their time deliberatively. Conversely, fewer homes are now selling above their asking prices—28.4% as compared to 33.2% last year—suggesting price negotiations are becoming common as buyers exercise caution.
Yet, amid uncertainty, the desire for home ownership remains strong. Data from Redfin suggests buyers have adapted by setting aside funds for unforeseen repairs stemming from natural disasters and climate change. Indeed, many housing experts point to the necessity of increased new construction to alleviate some of the affordability pressures plaguing the market. “Housing affordability has been elevated to the national level during the presidential campaign, bringing more attention to the issue,” explained Bright MLS Chief Economist Lisa Sturtevant.
Looking forward, the focus will likely shift to how specific regions respond to the economic stimuli and whether the Federal Reserve’s plans continue influencing mortgage rates positively. Despite current positive trends, analysts remain vigilant about rapidly changing market conditions and unpredictable external factors including natural disasters and economic policy shifts.
Overall, as the U.S. housing market navigates through the complicated waters of September 2024, it’s clear the terrain remains both challenging and full of opportunity. The stalwart resilience of both buyers and sellers suggests the housing arena is ready for whatever tomorrow brings.
