March Housing Market: More Homes, Rising Sales, and Big Changes Ahead
As we make our way through the early months of 2024, the housing market has been a bit of a roller coaster ride, with several recent market shifts that could affect both buyers and sellers. From the increase in home availability to a noticeable uptick in sales and the potential change in realtor commissions, we've pulled together the latest insights from industry experts Steven Thomas, Zillow, and the National Association of Realtors (NAR).
Whether you're a buyer, seller, or just keeping an eye on the market, this month's report offers some valuable information that can help you navigate the quickly changing housing market.
More Homes for Sale Across All Price Ranges
Real Estate Expert Steven Thomas says there are finally more homes for sale. Since the beginning of the year, we've seen more houses available in every price range. Thomas told us, "The inventory has been rising partly due to the higher mortgage rate environment, as rates have eclipsed the 7% mark several times over the past month, and also because more homeowners are opting to sell their homes."
While we're not out of the woods with the inventory shortage, the number of homes for sale is slowly increasing. This trend is one to watch, especially for sellers. Even in a hot market where sellers usually have the upper hand, some are getting too greedy with their asking prices. With higher rates, buyers are walking away if the price isn't right.
Significant Rise in Home Sales This Year
Zillow's Take: Sales Spike as Sellers Step Up Before Spring.
Home sales jumped by 9.5% in February, reaching a seasonally adjusted annual rate of 4.38 million. This is still a bit lower than last year, but it's the biggest monthly increase we've seen in 12 months.
The number of homes for sale also increased, especially compared to last February. Zillow's Senior Economist, Orphe Divounguy, notes that more sellers are getting into the market early this year, which is helping to close the gap between supply and demand. However, even with more homes up for grabs, the market is still tight, and homes are selling fast.
Home Prices Continue to Rise in 2024
NAR Reports: Home Sales and Prices Rise.
According to the National Association of Realtors, home sales soared by 9.5% in February, marking the largest monthly increase in a year. The median sales price also went up by 5.7% from last year to $384,500. There are more unsold homes now than last month, but we're still facing a shortage. NAR's Chief Economist, Lawrence Yun, says more housing supply is meeting the steady demand, thanks to job and population growth. But, mortgage rates and the variety of available homes will influence when and how people buy.
A Huge Change in Realtor Commissions
Big Legal Settlement Could Change How Much You Pay Your Realtor.
A recent legal settlement with the National Association of Realtors (NAR) might lead to lower realtor commissions. Historically, selling a home meant paying about 5% to 6% of the sale price in commissions, split between the buyer's and seller's agents. However, a lawsuit claimed that this system kept commission costs artificially high. Now, changes are coming that could reduce commissions by up to 30%, potentially lowering home prices.
NAR has agreed to implement policy changes to settle multiple class-action lawsuits filed by home sellers in the U.S. These changes include prohibiting brokers listing homes in NAR-affiliated databases from offering compensation to buyer's agents, aiming to prevent homeowners from having to pay inflated agent commissions. If the court gives the green light to the settlement, the NAR plans to roll out the rule changes by mid-July.
This could mean big savings for sellers, but it's a change that might take time to fully impact the market.
Key Insights: Rising Inventory, Sales, and Home Prices
1. More Homes on the Market: The increase in home availability, attributed to factors such as rising mortgage rates and a growing number of homeowners listing their properties, presents a promising trend for buyers and sellers alike. However, sellers are advised to avoid overpricing their homes, especially in a competitive market environment.
2. Sales Surge: The notable spike in home sales and an increase in inventory levels reflects heightened market activity driven by early market entries from sellers. Despite the uptick in supply, demand remains robust, contributing to swift sales transactions and a competitive market landscape.
3. Rising Prices: Home prices continue to climb, fueled by strong demand and limited inventory. While the price surge presents opportunities for sellers, it also raises concerns about affordability for buyers, especially first-time homebuyers and low-to-middle-income households.
4. Impending Changes in Realtor Commissions: The potential reduction in realtor commissions following a significant legal settlement with the National Association of Realtors could have far-reaching implications for sellers, buyers, and real estate professionals. While it may lead to cost savings for sellers in the long run, the full impact on the market dynamics remains to be seen.
As we enter into the spring homebuying season, the market is shifting quickly. More homes are available, sales are on the rise, and a significant legal settlement could make selling your home cheaper than before. Keeping an eye on these trends will be important for anyone looking to buy or sell in the coming months.
At Nuvision Credit Union, we're more than just a financial institution. We believe in empowering our members with the knowledge they need to make informed decisions, especially when it comes to one of life's biggest investments – your home. That's why we provide these monthly housing market reports. It's all about giving you a clear view of what's happening in real estate, from the latest trends in home availability and sales to the ongoing changes in prices.
