The Black Friday lowball sales may be over, but mortgage rates continue to move in a wallet-friendly direction.
Meanwhile, another surprising bright spot has appeared on the market: new real estate listings. Normally, it's highly unusual for new listings to appear at this time of year. According to Sabrina Speianu, economic data manager at Realtor.com®, new listings were below year-ago levels from mid-2022 until five weeks ago.
However, this trend has recently reversed, with this week's new listings up 8.9% from the same time last year, the largest increase since the summer of 2021.
The drop in mortgage rates may eventually lure home sellers back into the market, freeing them from the so-called "lock-in effect," where they are forced to hold on to a home loan that currently carries a higher interest rate.
Speianu predicts that if homeowners respond to the drop in mortgage rates by entering the market, the housing market could become more balanced in the coming months.
Additionally, this trend may also contribute to a breakout in home prices.In November, the median home price was $420,000, and in the week ending Nov. 25, the median listing price increased 1.2 percent compared to the same week last year.
This is consistent with recent year-over-year trends in median home prices, which remain high despite rising mortgage rates.
However, as Speianu points out, looking ahead, additional housing supply could help ease the long-standing affordability crunch by reducing pressure on home prices, and the Realtor.com® 2024 Housing Forecast projects that median home prices in the U.S. will decline by an average of 1.7 percent compared to 2023.
Despite the welcome increase in new listings, the total number of homes for sale remains fairly limited. Overall active inventory (a mix of old and new listings) rose only slightly by 1.8% in the week ending 25 November compared to the same week last year.
Additionally, from a seasonal perspective, the number of listings tends to decrease as we move into the winter months, and Speianu said that the typical seasonal drop in inventory is expected for the rest of the quarter through March, which will create additional challenges for those looking to take advantage of seasonally low listings in the coming months.
For homebuyers considering a purchase, they will need to weigh the pros and cons and make a decision soon, as the pace of home sales is picking up.
In the week ending 25 November, homes stayed on the market for two fewer days than they did at the same time last year, marking the eighth consecutive week in which the typical home has been snapped up at a faster pace than at the same time last year. This autumn, time on market for the average home has increased at a much slower rate than the typical rate of growth.
