As the leaves change and the air turns crisp, it’s the perfect time to take a fresh look at the shifting real estate landscape. In this update, we’ll explore the latest market trends, emerging opportunities, and expert predictions shaping the months ahead. Whether you’re buying, selling, investing, or just keeping an eye on the market, we’ve got the insights you need to make informed decisions. Let’s dive in and see what the November market holds for you!
Early-Stage Homebuying Demand Soars to Its Highest Point in 15 Months, Despite Elevated Mortgage Rates
Homebuyers are jumping back into the market now that the election is over and the Federal Reserve has cut interest rates for the second time in a row. The number of people reaching out to Redfin agents to buy or sell homes is up by double digits compared to last year. Redfin’s Homebuyer Demand Index, which tracks these inquiries, increased 17% from a year ago, reaching its highest level since August 2023. This marks the largest jump since January 2022, especially compared to last year when high mortgage rates were limiting demand. Currently, the weekly average mortgage rate is 6.78%, down from 7.44% last year. Mortgage applications have increased by 2% week over week, and pending home sales are up 4.5% year over year as of November 17. New listings have risen slightly by 0.4% year over year, and the total number of homes for sale has increased by 11.8%.
Existing Home Sales See Largest Increase in Almost Three Years
Existing home sales increased by 1.6% month-over-month in October, marking the largest gain since January 2022, with a seasonally adjusted annual rate of 4,179,346. Sales also rose 1.7% compared to the previous year, the first annual increase since November 2021.
Total home sales, including both existing and new homes, saw a 1.6% month-over-month increase and a 3.4% rise year-over-year, reaching the highest level in over a year and a half.
The median home price rose 5.2% year-over-year to $435,313 in October, the largest annual increase in six months.
The surge in home sales was driven by mortgage rates hitting their lowest point in two years, giving buyers more purchasing power. Additionally, the Federal Reserve had just announced a rate cut and indicated plans for more. Many buyers entered the market expecting mortgage rates to drop further after the Fed’s September 18 decision, though most of the rate decline had already occurred by then.
The average interest rate on a 30-year fixed mortgage dropped to 6.08% during the week ending September 26, prompting many Americans to begin touring homes and making offers in September. As a result, pending home sales jumped that month and were finalized in October, contributing to the rise in sales. However, the increase in pending sales did not continue into October.
Renter Households Are Growing Three Times Faster Than Homeowner Households
The number of renter households grew by 2.7% in the third quarter year-over-year, reaching a record 45.6 million. This is three times faster than the 0.9% increase in homeowner households, which now total 86.9 million.
The 2.7% increase, or 1.18 million additional renter households, was the second-fastest growth rate since 2015, only behind the 2.8% increase in the first quarter.
This data comes from a Redfin analysis of U.S. Census Bureau data going back to 1994. A renter household is defined as one where the head of the household reports renting the property, while a homeowner household is one where the head of the household owns the property. Both renter and homeowner households are at record highs due to the growing U.S. population.
Renter households have been growing faster than homeowner households for the past year as home buying costs have risen faster than rent.
In September, the median asking rent increased by 0.6% year-over-year, but rents have remained mostly flat over the past two years, becoming more affordable as wages grew by around 4%. In contrast, home prices rose by 6% year-over-year in September and have increased more than 10% over the past two years. With home prices becoming less affordable, just 2.5% of U.S. homes changed hands in the first eight months of 2024, the lowest rate in decades.
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Sources: redfin. Forbes. attom.
