There is good news in the real estate market to close 2024: there is much more supply in the real estate market. The bad news: Much of that supply is obsolete and remains unsold for much longer than usual.
Active listings in November were 12.1% higher than in November 2023 and reached the highest level since 2020, according to a new report from Redfin.
More than half of these homes (54.5%), however, had been on the market for at least 60 days without signing any sales contract. This is the highest proportion for any November since 2019 and represents a nearly 50% increase from the previous year, according to the report.
The typical home that did go under contract did so in 43 days, according to Redfin, the slowest November pace since 2019.
“Many properties on the market are obsolete or uninhabitable. There is a lot of inventory, but it doesn’t seem like enough,” Redfin agent Meme Loggins said in the report. “I explain to sellers that their house will remain on the market if it is not priced fairly. “Homes that are well priced and in good condition fly off the market in three to five days, but homes that are overpriced can remain on the market for more than three months.”
Mortgage rates soared more than 7% in October and mostly stayed there through the end of the year, according to Mortgage News Daily. Home prices also continue to rise. The latest S&P CoreLogic Case-Shiller monthly price report, released Tuesday, showed prices nationwide rose 3.6% in October compared to the same month a year earlier.
“With the latest data covering the run-up to the election, our national index has shown continued improvement,” said Brian Luke, head of commodities, real assets and digital at S&P Dow Jones Indices. “The elimination of the risk of political uncertainty has caused a rally in the stock market; It will be telling if a similar sentiment emerges among homeowners.”
Pending home sales, which is a measure of contracts signed to buy existing homes, rose in November both monthly and annually to the highest level in nearly two years, according to the National Association of Realtors. However, they were coming from a very slow base. Real estate agents say interest rates are now at a new normal.
“Consumers appear to have recalibrated their expectations regarding mortgage rates and are taking advantage of greater available inventory,” said Lawrence Yun, chief economist at NAR. “Mortgage rates have averaged more than 6% over the past 24 months. Buyers no longer wait or expect mortgage rates to fall substantially. Additionally, buyers are in a better position to negotiate as the market moves away from a sellers’ market.”
However, the slower pace of sales does not bode well for the new year, especially as interest rates remain elevated. There’s still demand, but renters are staying renters longer, according to another Redfin report, due not only to higher home prices but also higher prices for brokers and moving companies.
The seller lock-in effect, in which some sellers don’t want to trade in their low mortgage rates to move, began to decline in 2024, according to a year-end report from CoreLogic, but that was mostly due to life events. or the need to take advantage of the accumulated capital. The added inventory didn’t influence sales much, as costs got in the way.
“Buyers are struggling to keep up with home prices. The cost of owning a home now, when adjusted for inflation, is at its highest point in decades. “This persistent rise in prices and interest rates has created a challenging environment for both first-time buyers and those looking to move up the real estate ladder,” Selma Hepp, chief economist at CoreLogic, wrote in the report.
