February Monthly Housing Update: Real Estate Insights

Feb 27, 2024, 11:59 AM by Nuvision 

Housing Report

In this month's housing market update, we're breaking down the latest trends and numbers to give you a clear picture of what's happening in real estate. From the ups and downs of mortgage rates to the latest on home prices and sales, we've got insights from top sources like real estate expert Steven Thomas, Zillow, and the National Association of REALTORS® (NAR). Whether you're in the market to buy, sell, or just keeping an eye on things, Nuvision is here to help you sort through the headlines and help you stay informed about the ever-changing housing market landscape.

Mortgage Rates and Buyer Reactions

When talking to Real Estate Expert Steven Thomas, one of the main themes he talked about this month was the critical threshold of 7% mortgage rates. According to Thomas, the 7% rate creates a huge psychological impact on the housing market.

Just like airline travelers who scrutinize airfares, often switching plans for a better deal or ditching them when prices soar, homebuyers are equally reactive when it comes to mortgage rates. The ease of comparing flight prices online mirrors the homebuyer's caution over monthly payments, heavily influenced by fluctuating mortgage rates. When rates dipped to record lows from 2020 to early 2022, home values soared. However, the landscape shifted as rates jumped from 3.25% at the beginning of 2022 to over 7% by October, peaking at 8% in October 2023. This sensitivity to mortgage rates, amidst a backdrop of limited home supply and escalating prices, has created a housing market that's as responsive to rate changes as travelers are to airfare fluctuations.

What Zillow Says About the Market

In the latest report from Zillow, the housing market is showing early signs of activity, especially in pricier coastal and Western regions, as we head towards the spring season. There's an interesting trend where more than one in five homes listed on Zillow saw their prices cut in January, a rate that matches last year's but stands out as unusually high compared to the previous five years. These price adjustments are bringing sellers' expectations in line with the current market reality, which can be tough to gauge without a steady flow of recent sales. Homes that hit the mark in terms of pricing and marketing are finding buyers quickly, typically within 29 days, while others linger much longer, pushing the average listing age on Zillow to 72 days.

On the inventory front, buyers might find a bit more breathing room now than last year, with total inventory up by more than 3% year-over-year and new listings entering the market at nearly 6% higher. January saw a particularly significant increase in new listings, with a 43% jump from December.

Despite these shifts, the median home price in the US remains substantial, at $344,159, with the typical monthly mortgage payment assuming a 20% down payment coming in at $1,760.

NAR's Take on Sales and Inventory

The National Association of REALTORS® (NAR) says home sales picked up a bit in January, and prices are still climbing. The median sales price for existing homes also rose to $379,100, marking a 5.1% increase from January 2023 and continuing a trend of year-over-year price gains for the seventh consecutive month. Inventory saw a modest rise of 2.0% from the previous month, totaling 1.01 million unsold existing homes, which translates to about a 3.0-month supply at the current sales pace, hinting at a gradual easing in the tightness of the market.

NAR's Chief Economist Lawrence Yun attributed the growth in sales to a slight increase in listings and buyers capitalizing on lower mortgage rates than those seen towards the end of the previous year. The market remains competitive, with many homes receiving multiple offers and a significant number of transactions being made in cash, indicating strong housing wealth. The median home price reaching an all-time high for January suggests a robust demand, with properties typically staying on the market for 36 days. Despite a slight decrease in the proportion of first-time buyers, the overall market dynamics reflect a cautious optimism for a more balanced supply and demand moving forward.

Breaking It Down

  • Mortgage Rates: Both Steven Thomas and NAR are saying that the ups and downs of mortgage rates are messing with people's heads and wallets, making or breaking their decision to buy a home.
  • Market Buzz: Zillow and NAR are both noticing more action in the housing market. Zillow talks about price cuts and more options, while NAR is seeing more homes being sold and a bit more inventory.
  • Home Prices on the Rise: In January, the median price for existing homes climbed to $379,100, marking a 5.1% increase from the previous year. This upswing represents the seventh consecutive month of year-over-year price gains, indicating an upward trend in the housing market across all four major U.S. region

The housing market is still a mixed bag, but there are opportunities out there, whether you're buying or selling, as long as you keep an eye on rates and stay ready to make a move.