Hello! Welcome back to Flight School – Aerial View, where we take a quick look at the latest market updates.
Each week, we gather and summarize data from the leading analysts and economists in the real estate industry to provide you with a snapshot of what’s happening with four important topics: mortgage rates, inventory, demand, and pricing. Below are some key insights for the week of November 20th, 2023.
Starting with mortgage rates, where so far this week the 30-year fixed rate has been around 7.3%. This is the third week in a row where rates have been at or below 7.5%, marking a dip of close to 75 basis points from the highs we saw in October. The question now is whether this sustained dip will result in an increase in purchase applications? So far the data is telling us yes. We’ve seen back-to-back positive prints, but the real test will be if this data line holds between January and May 2024, as application data looks out 30-90 days before it hits the sales numbers.
Shifting to inventory, where numbers are still increasing. Yes, you heard that right, after all the data analysts declared that inventory had peaked last week, inventory threw everyone for a loop and continued building. The hypothesis is that sellers who had been holding out for improved selling conditions finally relented and now are trying to sell before the holiday dip. In terms of numbers, we have 570,000 single family homes on the market this week, up half a percent from last week. We are still talking modest inventory growth though. For context, we are still at 36% fewer available homes now than in 2019. There is no concern that this late season inventory increase is going to lead to any sort of selling panic or price crash, this is not a surge, think of it as slow and steady – just much later than usual.
On to our third topic, demand, which like inventory, is also on the uptick. 58,000 homes hit the market this week, 9,000 of which went into contract immediately, higher than the same week a year ago. If mortgage rates stay in the mid to low 7’s for the rest of the year this time period could mark the bottom of the 2023 housing recession.. This is reflected in the sales rate data. We started the year with 30% fewer homes in contract, now there are only 3% fewer. If we stay on this current trajectory we’ll catch up and show Year-over-year (YOY) home sales gains.
And lastly, pricing, where the median price for a single family home in the US this week was $428,000, a couple percent higher now than where prices finished 2022. While transactions fell this year, prices did not – to the dismay of the bearish housing market folks. The data is showing very little downward pressure on pricing because there are still too few homes available. We are going to see a dip between Thanksgiving and Christmas, but this year’s seasonal drop off has been less dramatic than is typical so it will be interesting to watch how quickly we rebound in January.
That’s it for this week, be sure to check in next week for another market snapshot! And as always, reach out now to learn even more about how Flyhomes can help you on your home buying and selling journey.