Monthly Archives: December 2024

The National Association of Realtors’ Pending Home Sales Index measures the number of contracts to buy homes signed each month. The index is considered a good indicator of future home sales, since contract signings typically precede closings by several weeks. According to the most recent release, the index found contract signings up 2.2 percent month-over-month in November, pushing pending sales activity nearly 7 percent higher than it was last year at the same time. The gains were widespread and included all regions of the country – except the Northeast which experienced a slight decline. Lawrence Yun, NAR’s chief economist, says increased contract signings are an indication that home buyers have reset their expectations. “Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory,” Yun said. “Buyers are no longer waiting for or expecting mortgage rates to fall substantially. Furthermore, buyers are in a better position to negotiate as the market shifts away from a seller’s market.” (source)

The past two years have been hard for home buyers. A combination of volatile mortgage rates, high home prices, competition and bidding wars, made finding an affordable home a challenge. Fortunately, though, the new year looks like it will bring brighter days for buyers. The National Association of Realtors certainly thinks so. Lawrence Yun, NAR’s chief economist, says the worst is over. “Home buyers will have more success next year,” Yun said. “The worst of the affordability challenges are over as more inventory, stable mortgage rates, and continued job and income growth pave the way for more Americans to achieve homeownership.” The group believes mortgage rates will fall slightly before stabilizing, home prices will increase at a more moderate pace, and the number of homes for sale will continue to improve. It also expects markets in South and North Carolina, Michigan, Missouri, Arizona, Texas, Tennessee, Indiana, Connecticut, and Massachusetts to be among 2025’s hot spots. (source)

In October, a mix of regional factors, higher mortgage rates, and extreme weather caused sales of newly built single-family homes to tumble. At the time, it was thought to be a temporary setback rather than the start of a downward trend. That now looks to be true. In fact, new numbers from the U.S. Census Bureau and the Department of Housing and Urban Development show new home sales charged back in November, increasing 5.9 percent from October’s level and 8.7 percent from a year ago. The rebound helped reset the previous month’s declines. For example, November data shows the South bounced back 13.9 percent from October, when sales were down sharply due to the hurricanes that affected the region. The results also continue a long-term trend in the new home market, which has been outperforming the market for existing homes for some time now. With new home sales and inventory both rising, newly built homes are increasingly an option for home buyers frustrated by a lack of available older homes for sale. (source)

According to ATTOM Data Solutions’ fourth-quarter 2024 U.S. Home Affordability Report, median homeownership costs in 556 of 566 analyzed counties were less affordable than their historical average. After years of rising prices and elevated mortgage rates, that should come as no surprise. It also shouldn’t be surprising that the number of counties that are more expensive than they’ve been historically was virtually unchanged in the fourth quarter from the previous quarter, or even the previous year. Market conditions have been relatively steady for a while now. Rob Barber, ATTOM’s CEO, says it presents a challenge for home buyers. “The U.S. housing market continues to generate great profits for most home sellers but also more and more financial stress for would-be buyers,” Barber said. “Despite recent declines in mortgage rates, down payments on typical home purchases have reached four times the average national wage.” Still, there are areas where major expenses on a median-priced home are affordable, including counties in Chicago, Houston, Detroit, Philadelphia, and Cleveland. (source)

Sales of previously owned homes rose nearly 5 percent in November, according to new numbers from the National Association of Realtors. The month-over-month improvement pushed home sales 6.1 percent higher than they were last year at the same time and matched the fastest sales pace since March. Lawrence Yun, NAR’s chief economist, says momentum is building. “Home sales momentum is building,” Yun said. “Existing homeowners are capitalizing on the collective $15 trillion rise in housing equity over the past four years to look for homes better suited to their changing life circumstances.” Home shoppers are also benefiting from an increasing number of homes for sale. Available inventory is now up 17.7 percent from last year, which helps keep home prices in check. Inventory gains are keeping homes on the market longer too. In November, properties typically remained on the market for 32 days, up from 25 days last year. (source)

The National Association of Home Builders’ Housing Market Index is a monthly measure of builder confidence in the market for newly built homes. Based on a survey of home builders, the index is scored on a scale where any number above 50 indicates more builders view conditions as good than poor. In December, the index was unmoved from the month before, holding steady at 46. Carl Harris, NAHB’s chairman, says builders continue to have concerns but are optimistic about the future. “While builders are expressing concerns that high interest rates, elevated construction costs, and a lack of buildable lots continue to act as headwinds, they are also anticipating future regulatory relief in the aftermath of the election,” Harris said. “This is reflected in the fact that future sales expectations have increased to a nearly three-year high.” It’s true. The index component measuring expectations for the next six months was up another three points in December, matching its highest level since April 2022. (source)

According to the Mortgage Bankers Association’s Weekly Application Survey, average mortgage rates moved higher last week from one week earlier. Increases were seen for 30-year fixed-rate loans with both conforming and jumbo balances, loans backed by the Federal Housing Administration, 15-year fixed-rate loans, and 5/1 ARMs. Joel Kan, MBA’s vice president and deputy chief economist, says the increases slowed demand, though home buyers remained active. “Buyers remained active in the purchase market, helped by gradually improving inventory conditions and a more positive outlook on the economy and job market,” Kan said. “Refinance applications declined last week, largely driven by VA refinances that were down 17 percent after two weeks of gains.” Overall, demand for mortgage applications was down 0.7 percent week-over-week. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

Home buyers and sellers shouldn’t expect to see too much change in the months ahead, according to a new forecast from Fannie Mae’s Economic and Strategic Research Group. The group’s monthly forecast – which covers their thoughts on where the housing market and economy are headed – says there will be little change in the new year. In fact, the group says, though mortgage rates will decline and prices will decelerate, both will only fall modestly. They also expect sales of previously owned homes to remain relatively slow, while the new home market will be a “bright spot.” In other words, things may look very much the same in 2025 as they did in 2024. Mark Palim, Fannie Mae’s senior vice president and chief economist, says rate volatility may provide buyers with opportunities. “Heightened mortgage rate volatility may present opportunities for would-be home buyers to take advantage of temporary lows, and we may see stretches where housing activity is boosted by lower rates – but, on average, we expect mortgage rates to remain elevated and a hindrance to activity,” Palim said.” (source)