We may be nearing the bottom in home sales even if mortgage rates don’t decline. As a result, there may be a light at the end of the tunnel in this crazy market cycle.
At least, that’s what the data seems to suggest as inventory grows and new listings decline at a less aggressive rate than last year.
To get the weekly picture of the housing market, watch the video above.
Don’t have time? Here are some quick takeaways from our latest data dive at Altos Research.
Inventory creeps up
There are now 562,000 single-family homes on the housing market. That’s up 1.5% from last week.
Don’t be surprised if inventory keeps climbing next week into November. This has been a supply-constrained market, and it’s not just a demand thing.
New listings decline isn’t as steep as a year ago
There were only 53,000 new listings (single-family homes) unsold this week, plus 10,000 more new listings that are already in contract. There are far fewer sellers now than in any recent year.
However, last year’s seller decline was much more steep. By next week, we could have more new sellers than this time last year. This would be the first inkling of a housing market where sales could start to post year-over-year gains.
Soaring mortgage rates stifle buyer demand
There are only 319,000 single-family homes in the contract-pending stage. That’s a fraction fewer than last week and 6% fewer sales than last year.
Although there are just 53,000 new contracts for single-family homes this week and we’re heading into a traditionally slower homebuying season, we might end the year with more sales in the pipeline than the disastrous fourth quarter of 2022.
Consumers are more sensitive to changes in mortgage rates than to absolute levels. Both 2022 and 2023 were marked by sharp increases in mortgage rates. So even if rates stay at 8%, that would imply improving home sales volume in 2024.
Price cuts are still on the rise
About 38.9% of the homes on the housing market have taken a price cut. Future home sale price signals are not as negative as they were this time in 2022 when 43% of the homes had taken a price cut.
Home prices continue to be 2% to 3% above last year and look to end the year at that level. The median price of single-family homes in the United States is now $434,950.