The 2024 single-family real estate market has kicked off on a positive note with January existing home sales ticking up by 3.1% month over month, reaching a robust 4 million-unit pace, the fastest since August 2023. This growth was driven by single-family home sales, which saw a substantial 3.4% increase, while sales for condos and co-ops remained steady.
Data from Pending Home Sales Index and mortgage applications for purchase reveal this positive momentum. The Pending Home Sales Index, a reliable indicator of upcoming sales activity, surged by 8.3% in December, aligning with the Fed's decrease in mortgage rates from their peak in October. Correspondingly, purchase applications rose by an impressive 23.1% from October to January.
Inventory remains constrained across the U.S., contributing to upward pressure on prices. The combination of lower mortgage rates and tight inventory has resulted in higher home prices, impacting the overall affordability of homes for many potential buyers. Supply constraints are further exacerbated by a "lock-in" effect that discourages prospective sellers with lower-than-market mortgage rates from listing their homes. The supply picture may begin to improve when interest rates come down enough to motivate sellers to enter the market.
At present, the tight supply is reflected in a median existing home sales price of $379,100, marking the highest sales price ever for the month of January, and the seventh consecutive month of year-over-year price gains. Additionally, homes are spending more days on the market compared to a year ago, averaging 36 days in January, up from 33 days last year. However, with the onset of the busy spring selling season, homes are expected to sell more rapidly in the coming months.
