PARTNERS VOICE | MARKET FORECAST
November 2024

The past few years of the housing market have been quite a roller coaster, but we are finally seeing some traction. With home sales rising in most major US metropolitan areas, an early October jump in mortgage applications, and the Fed set to continue its rate cuts, the market is uncharacteristically warm this fall. Let's take a look at some recent market trends, the economic indicators driving them, and what buyers and sellers can do to be part of the action.

Pending Home Sales Up

Following the Fed's September rate cut, home buyers came out of the woodwork, creating a slight bump in demand. Supply is still rising faster, though, with new listings at a 5.7% year-over-year uptick. So buyers currently hold the negotiating power, and those willing to get out there have an advantage. In the four weeks ending on October 6, pending home sales posted their biggest increase since 2021, with closed home sales also on the rise. Homes are selling faster, too, with houses priced over $750K seeing a noticeable drop in Days on Market/Expected Market Time before closing.

Mortgage Rates and the Economy

Multiple economic factors influence mortgage rates, the greatest determining factor for buyers and sellers alike. National Inflation and employment rates are the major economic components that influence the Federal Reserve as it decides whether, and how much, to cut interest rates. Per BankRate, "The current annual inflation rate is 2.4%, back to levels last seen in February 2021. However, prices are still 21.4% higher since the beginning of the pandemic, and only about 6% of the nearly 400 items tracked by the Bureau of Labor Statistics cost less today than they did in 2020."

As for employment, an unexpectedly strong September jobs report (total nonfarm payroll employment increased by 254,000) showed that the labor market was sturdier than expected. This news affected the reaction in the financial markets, which overcorrected, causing an increase in mortgage rates in mid October. That jump in rates was the market anticipating what the Fed will do next, based on the improving economy.

The next Fed meeting will be held November 6-7, followed by its final meeting of 2024 on December 17-18. Barring another surprising jobs report, the Fed will most likely cut interest rates by another .25-.5% at each meeting. The lower interest rates fall, the more affordability recuperates, resulting in considerable rise in demand for housing and an increase in active listings.

Making the Decision to Buy

Despite their fluctuation, mortgage rates are still significantly lower than they were a year ago, and in fact, are in the lowest range they've been since February 2023. Falling mortgage rates have lowered the typical homebuyer’s monthly mortgage down to $2,526, which is 5.8% lower over last year. According to Mike Fratantoni, MBA’s senior vice president and chief economist, "The decision to buy a home is impacted by many factors, not just the level of mortgage rates. The largest constraint for many prospective homebuyers over the past year had been the lack of inventory." Now that active listings are ticking upward, and with mortgage rates still low compared to recent history, many potential homebuyers are moving forward.

The bottom line is, if you see a home you love, make an offer! Mortgage payments are down from last year, yet In these continuously "unprecedented" times we live in, interest rates will continue to fluctuate. With an election and time of transition to a new administration in the mix, it's going to be impossible to predict, let alone time the market. Peruse listings, visit open houses, and if you find the perfect home, do what's best for you and your family. And always remember, we're here to help guide you through all the moving parts!

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