Real estate listings have returned
The engine powering the housing market’s surprising burst of activity is the number of homes for sale, which shot up by 10.1% year over year for the week ending Jan. 27.
“For a 12th consecutive week, active listings registered above the prior-year level, which means that today’s home shoppers have more homes to choose from,” says Realtor.com Chief Economist Danielle Hale in her most recent analysis.
Many of these listings are newly on the market, too, with 2.1% more home sellers jumping in this week compared with a year earlier.
“While the jump was not as big as seen in recent weeks, further improvement in new listings will help contribute to a recovery in active listings, meaning more options for home shoppers,” explains Hale.
This influx of listings has many buyers ready and raring to make a deal with their checkbooks at the ready.
Homes were snapped up three days faster for the week ending Jan. 27 compared with this time last year. This marked 17 weeks the typical home spent less time on the market than the same week the year prior. (The typical home spent 69 days on the market in January.)
In general, though, it’s worth remembering that overall housing inventory remains a whopping 40% below 2017 to 2019 levels. Still, this latest uptick in listings is a welcome step in the right direction.
The mortgage rate outlook
The Federal Reserve met at the very end of January. While it didn’t raise its interest rates to combat inflation, it didn’t lower them either. That means mortgage rates, which generally follow the same trajectory as the Fed’s rates, aren’t likely to drop by as much as many homebuyers had hoped.
“Incoming data will continue to be an important arbiter of the likely rate path, and the Fed is waiting to see what results, alongside everyone else,” says Hale. For example, if the data shows that inflation has fallen below the Fed’s 2% target, the Fed could cut rates sooner.
Hale explains that buyers and sellers face an unknown future as to exactly when—and in what direction—rates might go. However, she predicts “the general trend is likely to be lower, in line with Realtor.com’s 2024 Housing Forecast and also in line with consumer expectations, which have pivoted toward this reality in recent weeks.”
Sam Khater, Freddie Mac’s chief economist, agrees.
“Mortgage rates have been stable for nearly two months, but with continued deceleration in inflation, we expect rates to decline further,” he said in a statement.
Why home prices still seem stuck
Mortgage rates aren’t the only variable seemingly stuck in limbo. Home prices have also “been in a rough holding pattern since May 2023,” explains Hale.
Indeed, the median list price was up just 0.2% for the week ending Jan. 27 compared with the same week last year. (The median list price in January was $409,500.)
List prices typically dip during winter, then rise once temperatures warm up as home shoppers show up in droves. This seasonal upswing typically starts as early as January.
“The nation’s median home listing price typically rises after the first week of the year,” says Hale. This year, however, it might not be by much.
“We may not see the intensity of increase that we’ve seen in 2021 to 2023,” adds Hale.
Hale predicts that cooling home price growth might, along with softening mortgage rates, “give buyer incomes a chance to catch up and improve the affordability picture.”
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