What does the latest housing market data say?
The latest weekly housing report from Altos Research indicates that homebuyers appear to be staying on the sidelines even after the recent dip in mortgage rates.
Inventory continues to rise and is currently 39.5% higher than the same time last year. Homebuyers have a lot more choices than they did last year, but we’re still far away from a ‘normal’ inventory level for homes. Normal is considered around 900,000 to 1 million available unites. We’re currently at 668,363 available units according to the most recent data.
The recent increase in available units on the market indicates that homebuyers aren’t jumping in despite the increase in inventory. Altos is seeing homes stay on the market for longer and seeing an increase in price cuts. The percentage of properties with recent price reductions is up to 38.6%. Anything above 40.0% indicates a buyers’ market, and the data shows that we’re almost there.
The median price of a new housing contract is at $389,900. That’s down slightly week-over-week, but still up about 3.1% when compared to last year. However, we hit the peak of the market earlier, so there’s a chance we could see home prices dip lower by than last year before the end of 2024.
Are cash investors staying out of the housing market?
According to a report from Realtor.com, the share of investors purchasing homes fell to 64% in the first quarter of 2024. This is lower than the 69.7% mark that was set during the fourth quarter of 2023.
G. Brian Davis, a real estate investor and co-founder of property management software SparkRental, believes this is really good for regular home buyers or smaller investors.
Davis stated, “It’s better for everyone involved that institutional money is withdrawing from the single-family home space. It creates less artificial demand among buyers, therefore reducing some upward pressure on prices. It also leaves room for mom-and-pop investors to operate.”
Will a Fed rate cut send mortgage rates lower?
A recent article posted on Yahoo! Finance asked a top analyst what could happen if or when the Federal Reserve starts cutting rates. Will mortgage rates start to slide? Not so fast, says Alan Ratner, the manager directors for housing research firm Zelman & Associates.
Ratner said, “The bond market is already pricing in rate cuts, so the simple act of the Fed cutting is not necessarily going to have a direct impact on mortgage rates. Right now, the bond market is already pricing in that outlook, so we’ll see how far rates actually move lower, but our view is it’s going to be a fairly gradual decline over the next several years, as opposed to a step function lower.”
However, when asked what would drive rates significantly lower, Ratner cited cooling inflation. Ratner said, “What the market is showing right now, though, is a lot of optimism that the tamer inflation metrics are going to translate to much lower mortgage rates in the back half of the year and kind of solve that affordability problem.”
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