As 2024 draws to a close, there’s a mix of optimism and concern echoing through the housing market. While it’s true there’s more housing inventory available, much of it is languishing on the market for extended periods.
According to Redfin’s latest report, the number of active listings in November surged by 12.1% compared to the same time in 2023, marking the highest level of available homes since 2020. Yet, there’s a catch: over half of these homes, precisely 54.5%, lingered unsold for at least 60 days. This represents the highest proportion for November since 2019, reflecting an almost 50% increase from the previous year.
Redfin also notes that homes going under contract did so at a slower rate, averaging 43 days—making it the slowest November since 2019. Meme Loggins, a Redfin agent, observed in the report, “The market is flooded with listings that are either stale or not move-in ready. Despite the volume, it feels like there’s still a shortage.” She advises that sellers who price competitively and maintain their properties can sell in as little as three to five days, whereas overpricing leads to drawn-out sales stretches, sometimes exceeding three months.
Mortgage rates surged past 7% in October and largely stayed there as the year wrapped up, based on data from Mortgage News Daily. Meanwhile, home prices keep climbing. According to the latest S&P CoreLogic Case-Shiller report, released on Tuesday, national prices rose by 3.6% in October from the previous year.
Discussing the situation, Brian Luke, who oversees commodities and real estate at S&P Dow Jones Indices, commented, “Our national index, which reflects the pre-election period, indicates sustained growth. With political uncertainty subsiding, equity markets have rallied. It’ll be interesting to see if similar optimism surfaces among homeowners.”
The National Association of Realtors reports a promising rise in pending home sales—signed contracts for existing homes—both monthly and annually in November, reaching a peak not seen in nearly two years. This increase follows an exceptionally slow starting point, with the association noting that interest rates have settled into a “new normal.”
Lawrence Yun, NAR’s chief economist, pointed out, “Buyers seem to have adjusted their expectations concerning mortgage rates, capitalizing on the greater availability of homes. Mortgage rates have hovered above 6% for the past two years. Buyers aren’t counting on them to drop significantly. This shift makes it a more balanced market, offering buyers more negotiating power.”
Nonetheless, the leisurely pace at which homes are selling could spell trouble for the new year, especially if high interest rates persist. Although demand hasn’t vanished, many would-be buyers remain renters longer, partly due to steep home prices and rising costs for real estate services.
The phenomenon dubbed the ‘seller lock-in effect’ eased somewhat in 2024, as noted in CoreLogic’s year-end report. Some sellers hesitated to abandon their low mortgage rates unless prompted by life changes or a need to access built-up equity. However, even with more homes on the market, sales haven’t picked up significantly due to these costs.
CoreLogic’s chief economist Selma Hepp highlights the challenges, writing, “Prospective buyers are struggling to keep up with escalating housing costs. Adjusting for inflation, owning a home now reaches cost levels not seen in decades. This relentless rise in prices and interest rates complicates matters for both first-time buyers and those aspiring to move up the housing ladder.”
