The rate of home sales is picking up! The number of homes under contract across the country has risen for the last few weeks. Purchase mortgage applications are up for five weeks in a row. It seems like mortgage rates are getting closer to 6% are shaking loose a few transactions.
These are small moves, and it’s early. It’s not a big rush of home sales of course, we’re just looking for any signs of resuscitation, and we can finally start to see some. In this video today, we’ll look at the latest pending home sales data and also in the pricing data where we can see just a tiny heartbeat of homebuyer activity.
The homebuying metrics are showing slightly higher than a few months ago and higher than last year at this time. Last year in the fourth quarter, the skies were darkening quickly as montage rates rose to 8%. Now, we’re just teasing out the first signals of a hopeful recovery in the weekly data.
It’s now the end of the third quarter of 2024, it’s been a really weak year for home sales but maybe, just maybe this market is turning the corner. Let’s look at this week’s data.
Pending home sales climb
There are 362,000 single-family homes under contract. That’s been climbing all September from 357,000 earlier in the month. It was just under 1% increase this week. We’re showing 6% more homes in contract now than last year.
Homes stay under contract for 30 to 40 days. At the end of the month, a bunch of sales close so next week will have more sales completed and fewer homes still in contract.
When homes are taking offers faster than the sales are closing, that pending count climbs, which is what we’ve had in September. When we look at the new contracts pace, the homes that took offers and went into pending status this week, we want to know if that pace is heading up or down. In fact, that pace of new contracts pending ticked up 1% this week to 63,000 single-family homes. With another 12,000 condo sales underway.
The question is: Does the momentum keep up into the first quarter of next year? That’s when it’ll really count.
Inventory is climbing, too
Inventory has been climbing too. Inventory is still rising right now. It’s not late in the year for the supply of unsold homes to keep climbing. But it could be that we are seeing lower rates shaking loose sellers who have been sitting on the fence for two years. I think we’ll see investors in the big markets like Central Florida and Texas looking to unload some underperforming assets.
Hurricane Helene disrupted a big chunk of the country. Next week, I’m looking for declines in inventory and new listings in Florida, Tennessee, Georgia, and North Carolina. It can be surprisingly difficult to see the immediate impacts of natural disasters, but this was a big one. It wouldn’t surprise me to have inventory knocked down a couple percent next week and that’ll throw a wrench in all our forecasting models.
New listings come at healthier pace
There were 63,000 new listings unsold this week, with another 9,400 immediate sales. Not a lot, but a slightly healthier pace than last year. I chatted with an Atlanta broker this week who mentioned they’ve suddenly had a few multiple offer scenarios on the best listings, which hasn’t been happening for this year. The immediate sales rate as a percent of inventory is still as low as when we started tracking during the pandemic frenzy. That number doesn’t show any broad gains in demand, despite that anecdote, but it’s something to keep watching.
In total there were 6% more sellers this year than last.
Despite a healthier market, we’ll see gradually fewer sellers this fall, and it’ll be interesting if we have any relative upward trend compared to the last two years. Mortgage rates have moved sideways for a couple weeks now, but what if they drop into the 5s?
Home prices are holding up
Home prices are also holding up. I mentioned this last week. Home prices are showing just slightly positive gains for the year — up 2% or 3%.
Prices stayed resilient through the weakest demand times in this market this year. With lower mortgage rates it seems unlikely that home prices will face renewed downward pressure. This data implies that homebuyers have been sitting on the sidelines waiting for a big price correction, but that is unlikely to materialize. We don’t see price declines anywhere in the data.
The median price of all the homes on the market is $443,000 right now. That’s down a tick from last week and is about 1% more than last year at this time.
The median price of the newly pending contracts – remember there were more contracts this week, this is the price point people are buying – actually ticked up for the third week in a row to just under $390,000.
Price reductions cap out
The percentage of homes on the market with price cuts has been hovering about 40% for several weeks now. There’s been a bit of a cap on price cuts between discouraged sellers withdrawing listings and with just marginally more offers being made for purchase.
This leading indicator is like the other price measures. None of it is pointing lower — it’s all flat.
That can change quickly of course. The big trends from earlier in the year are finally shifting. For your homebuyers and sellers, these conditions can change fast and it can be very impactful for smart decision making.
Mike Simonsen is the founder of Altos Research.
