- 🏡 Home prices and borrowing costs are still high 📈
- 🤔 Signs indicate a shift towards a more buyer-friendly market 🔄
- 📉 Decreased home sales and higher days on market 📅
- 💸 Mortgage rates are still high but slightly down from peaks 🏦
- 🏘️ Increasing home inventories and rising supply 📊
- 💰 Buyers backing out and cancelling agreements 🚪
- 🏷️ Sellers cutting prices to attract buyers 🔖
The housing market landscape in 2024 is providing new indicators that prospective homebuyers need to keep an eye on. While home prices and borrowing costs remain elevated, several factors suggest a gradual move toward a more buyer-friendly market. In this blog post, we will explore the key signals pointing to this shift, providing valuable insights and advice for navigating today’s real estate environment.
The Current State of Home Prices and Borrowing Costs
The present housing market is characterized by high home prices and borrowing costs. As of June 2024, the median cost of an existing single-family home in the U.S. hit an all-time high of $426,900. Concurrently, the average 30-year fixed mortgage rate stands at 6.78%, only slightly down from its recent peak. These factors are critical, as they represent significant hurdles for many potential buyers.
Signs of a Buyer-Friendly Shift
Despite the persistent high costs, there are notable signals that the market is starting to become more favorable for buyers. Here are some key indicators:
1. Decreased Home Sales and Higher Days on Market
- Sales Dip: In June, home sales dropped by 5.4% from May, amounting to approximately 3.89 million homes sold. This decrease suggests that market activity is cooling off.
- Longer Listings: Homes are staying on the market longer. For instance, 64.7% of homes listed in June were on the market for at least 30 days, compared to 59.6% last year. According to Zillow, the average home sale duration increased to 46 days from 35 days the previous year.
2. Buyers Backing Out and Cancelling Agreements
A significant number of home purchase agreements are being canceled. In June, around 56,000 home-purchase agreements were called off. The primary reasons include buyers reassessing their budgets and reconsidering their necessities. High monthly costs make buyers more discriminating and quick to back out over minor issues.
3. Rising Inventories and Supply Levels
Increasing home inventories indicate a shift in market dynamics:
- Inventory Growth: Total housing inventory at the end of June reached 1.32 million units, up 3.1% from May and a substantial 23.4% from the previous year.
- Supply Expansion: Unsold inventory now represents a 4.1-month supply, an increase from 3.7 months in May and 3.1 months a year ago.
This increasing inventory provides buyers with more options and reduces the competition they face, particularly noticeable in regions like the South.
4. Sellers Cutting Prices
More sellers are adjusting their expectations and cutting prices to attract buyers:
- Price Reductions: About one in five homes for sale in June had a price cut, marking the highest level for any June on record. This is an increase from 14.4% the previous year.
- Builder Discounts: Approximately 31% of home builders reduced prices to boost sales, showing a significant rise from previous months.
Conclusion and Advice for Potential Buyers
While the term “buyer’s market” might still be a bit premature, these signals collectively point towards a market that’s becoming more balanced. Here’s what prospective buyers should consider:
- Monitor Days on Market: Homes staying longer on the market can translate into negotiation power. Potential buyers should look for properties that have lingered and may offer price reductions.
- Negotiate: With more homes experiencing price drops, buyers should be prepared to negotiate aggressively.
- Understand Your Financial Limits: Be clear about your budget and what you can realistically afford, factoring in not just the home price but also taxes, insurance, and maintenance.
