Record Low Home Sales
The 2024 spring/summer home selling season has been the worst on record since tracking began. Sales numbers for April and May are significantly lower than the previous year, with June expected to follow the same trend.
Factors Influencing the Market
Mortgage rates hover around 7%, with little expected improvement even if the Federal Reserve cuts rates. Low inventory remains an issue in some markets, although nationally, inventory is gradually rising towards pre-pandemic levels.
Home Prices
The median home price reached an all-time high of $419,500 in May 2024, a 51% increase from five years ago. Home prices are unlikely to decrease significantly in the near future.
Consumer Sentiment
The Fannie Mae Home Purchase Sentiment Index rose to 72.6 in June 2024, but only 19% of consumers believe it is a good time to buy a house. A slight increase in the number of people who think it is a good time to sell (from 64% to 66%) was noted.
Economic Indicators
Despite some optimism, there is concern over affordability, with many homeowners spending close to 50% of their income on housing costs. A growing percentage of people report their household income remaining flat while living costs rise, further straining affordability.
Supply and Demand Imbalance
A significant disparity exists in housing supply based on price ranges: lower-end homes ($100,000 to $500,000) have limited supply, while higher-end homes ($1 million or more) have greater availability. This imbalance artificially inflates the median home price and limits affordable housing options.
Expert Predictions
CoreLogic predicts a 5.7% rise in home prices in 2024, attributed to high-end home sales rather than overall market health. Some economists, like Odetta Kushi, foresee a decrease in home prices due to increased inventory and decreased demand. Lawrence Yun of the National Association of Realtors predicts an optimistic rise in home sales in the coming years, a view seen as overly ambitious given current trends.
The Future of the Housing Market
A significant portion of homeowners (42%) own their homes outright, many of whom are baby boomers. Their eventual sale of properties could impact market dynamics. Immigration may play a role in absorbing the influx of homes sold by baby boomers in the future, though this is uncertain. Predictions are varied, but most experts agree that significant changes in the market are unlikely without substantial improvements in affordability.
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