What happens to the housing market when lending rates finally go down?

Does it get dark earlier than morning? If we look at the housing market currently, gross sales are bad, unused inventories are bad, prices are going down. However, if we look at the current data, things look the most bearish all year. The deadline saw excellent inflation data, the bond market rallied and lending rates fell significantly below 7% for the first time in months. Perhaps we are at the height of loan fees in any case? If so, how should we predict the housing market’s response? We’ll delve deeper into those questions once we take a look at the raw numbers from this date.

The stock declined on that date, which included the July 4 long relief weekend. Home costs and unused inventory also declined. It’s completely normal to have a long respite weekend. The market is slowing down but doesn’t seem to be stopping. Contrast this date with 2022, when the stock rose 3% within the relief date. That was once a business worth noting.

On the value aspect, there was a first negative print on the year-to-date value of unused listings at the closing date. The price of newly listed houses on the market is 1% lower than last year.

Let’s take a look at the highlights of the US real estate market as we now head into the second half of 2024:

the stock is rather sick

There were recently 651,000 unsold single-family homes on the market nationwide. If truth be told, this is only a fraction of a % less than any date in the past. The stock is 38.5% higher than a year ago. However, there are 32% fewer unsold homes on the market now compared to 2019. Stock is increasing in all sizes across the country. On the other hand, in most parts of the US there are still fewer households than before the pandemic. Some parks, Florida, Texas, Oklahoma, Arkansas and Idaho, now have more homes than 2019’s pre-pandemic limit.

The trend is to wait until the second half of the year to see whether or not the stock helps maintain the value that emerged at the end of the previous year or whether it typically returns like it did in the summer.

ancient lists are also sick

The closing date includes the long relief weekend, so unused lists are obviously sick. Only 57,000 unsold listings for single-family homes have not sold to date, with another 11,000 brisk gross sales. This is a very small option of unused listings that took the offer and were immediately included in the promise. I really like that “immediate sale” volume as a gauge of the natural range of demand. The additional public is ready to shop for the best playground; Extras who pounce on a business as soon as they see it. Only 16% of listings have had a fast sale to date. This is very low and has been declining since May. There are a total of 68,000 unused listings, 6% fewer dealers than last year.

Those numbers will increase again in the future. It seems that dealers are now pulling back and this may put a cap on stock growth for the year.

PRISTIN PENDING ILL BECAUSE OF RELIEF

Gross sales were poor even during a relief weekend. By this date there were 58,000 unused honor cards – about the same level as the previous two years of relief.

There are now a total of 382,000 single-family homes available. This is unchanged from the last date and is only 1% higher than a year ago. We do not see any increase in gross sales.

What I’m looking for in the pending data is, for example, if there is a decline in additional charges for July and August – we should see unused pending increase from 65,000 per day to around 70,000 per day going forward. If the loan fee drops below 6.75 and stays there, gross sales could increase slightly, possibly 8%.

the cost is very low

The average price of entire listings is now $450,000. This is down 1% from the last date and unchanged from a year ago.

The average price of unused listings as of this date is $404,900. This is a heavy release to date, although, once again, that’s a relief. Through this measure, monitoring all unused listings at a certain date, prices dropped below the same date a year earlier – 1% lower.

This is the first negative print on the price of an unused listing in more than a year. Now, that’s a date, and it’s a relief date, so costs are likely to increase at a later date. It is worth noting that Shor did not pursue the alternative route. The cost of unused inventories is running about 3% higher than a year ago. This is shrinking as the year goes on and the emphasis is decreasing with upper loan fees. Having an adversarial print is a part of that compression.

The average value of new pending honor words nationwide as of this date is $393,000. This is down 1.5% for the date. The cost is at the nearest level of relief at all times. Those pending honor words are a proxy for what is being promoted. They are homes that do not appear to be but have been offered, although they are the ones that have initiated the gross sales process on this date. Those prices are running 3.1% costlier than a year ago. Similar to the record aspect, that disclosure is compressed. It was in the range of 4-5% on an annual basis for many years. In the coming months, home prices will generally decline as we approach the peak of buying. We will keep an eye on the stock for this compression as well. I am expecting the compression to continue so that we end the year in the 0-3% zone.

If we are at the peak of lending rates, and pushing for alternatives, it is no longer unclear to me how long we will see spreads rising again. We will wait and see, however, as this could be a possible outcome.

Price discount decreases

One of the most important reasons why I am expecting a decline in home value is that this value is below the well-known indicator. About 38.3% of people’s lists have seen a price cut from the latest checklist price. This is additional deductible than any fresh July.

Again, a lot of this nuance reflects how customers react to adjustments in loan rates. If we are lucky and enjoy loan rates hovering around here for the remainder of the year, we will see a rebound in demand at lower price cuts in the coming playing field. When you look at your home, if you don’t get an offer, you lower your price. But if something additional is offered to consumers through new cheap mortgages, this situation may stabilize or even worsen over time.

In the last two Septembers 2022 and 2023, we saw a huge jump in loan rates, which kept home buyers away, and will we see a jump in price discounts at that time. Those two jumps in price cuts looked very good for the future of loan growth.

Loan rates have remained higher this year than anyone expected. It is no longer cloudless but we have turned a corner. Although possibly?

Mike Simonsen is the founder of? altos analysis,

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