As we approach the end of 2024, the housing market is experiencing a mix of positive and negative developments. On the one hand, the supply of active listings has increased significantly, rising 12.1% in November compared to the previous year. This marks the highest inventory level for November since 2020. However, a concerning trend has emerged: over half of these homes, specifically 54.5%, have remained on the market for at least 60 days, a substantial increase from previous years and the highest since 2019.
The average time for homes to close has also extended, taking about 43 days, which is the slowest pace observed for November in four years. Real estate agents have noted that many available properties are either outdated or in poor condition. Proper pricing is crucial; well-priced homes in good shape sell quickly, while overpriced homes may languish on the market for months.
In addition to these trends, mortgage rates have remained above 7% since October, contributing to a slow rise in housing prices, which increased 3.6% year-over-year in October. Despite the challenges, there is some positive news, as pending home sales showed an uptick in November, reaching levels not seen in about two years. However, real estate professionals warn that buyers have adjusted their expectations regarding mortgage rates and are now better positioned to negotiate, moving away from a seller’s market.
Despite this potential momentum, the market faces significant challenges, particularly with high interest rates continuing to burden both buyers and potential sellers. Many renters are choosing to remain in their current situations due to rising home prices and additional moving costs. A report from CoreLogic indicates that while the seller lock-in effect, where homeowners avoid moving due to low mortgage rates, is easing slightly due to personal circumstances, the overall inventory growth has not translated into increased sales.
The increased cost of homeownership, now adjusted for inflation, is at its highest in decades, presenting a challenging environment for buyers, especially those looking to upgrade. This situation underscores the complexities currently facing the housing market as it navigates the confluence of rising prices and mortgage rates.