There is positive news in the housing market as 2024 comes to a close: there is a significant increase in supply. However, a considerable portion of this supply remains unsold for longer periods than usual.
According to a recent report from Redfin, active listings in November were 12.1% higher compared to November 2023, reaching the highest level since 2020. More than half of these homes (54.5%) have been on the market for at least 60 days without a sale contract, the highest share for any November since 2019 and nearly 50% higher than the previous year.
The average home that did sell took 43 days to go under contract, the slowest pace for November since 2019, as reported by Redfin. Redfin agent Meme Loggins mentioned in the report that many listings are either stale or uninhabitable, despite the increased inventory. Loggins emphasized the importance of pricing homes fairly to avoid them sitting on the market for extended periods.
Mortgage rates rose above 7% in October and have largely remained at that level until the end of the year, according to Mortgage News Daily. Home prices continue to climb, with the latest S&P CoreLogic Case-Shiller monthly report showing a 3.6% increase in national prices in October compared to the previous year.
Pending home sales, a measure of signed contracts for existing homes, increased in November both monthly and annually to the highest level in nearly two years, according to the National Association of Realtors. However, this growth is from a slow base, with interest rates now considered to be at a new normal.
Despite the rise in pending sales, the slower pace of selling homes may pose challenges for the new year, especially with elevated interest rates. Renters are staying in rental properties longer due to higher home prices and increased costs for brokers and movers, as noted in another Redfin report.
The seller lock-in effect, where some sellers are hesitant to give up their low mortgage rates to move, began to ease in 2024, primarily due to life events or the need to access accumulated equity, according to a year-end report from CoreLogic. However, the increased inventory did not significantly impact sales due to existing costs.
Selma Hepp, CoreLogic’s chief economist, highlighted in the report that the cost of homeownership, adjusted for inflation, is currently at its highest point in decades. The continuous rise in prices and interest rates presents challenges for both first-time buyers and those looking to upgrade their homes.
