The drop in mortgage rates has not been enough to stimulate homebuyer demand. Existing home sales declined by 3.3% year-over-year in August 2024, reaching an eight-month low. This decrease occurred even as the average 30-year fixed-rate mortgage fell by 60 basis points to 6.5% in August and dropped another 40 basis points by mid-September. However, record-high home prices continue to create barriers for buyers. The median price for a single-family home increased by 2.9% year-over-year to $411,500, setting a new record. Tight inventory, with fewer than 1.1 million homes on the market for five consecutive months, is keeping prices elevated, making it hard for many households to afford a home.
Sellers still hold leverage in the market, but homes are taking longer to sell. In August, 48% of listed homes had been on the market for at least 60 days, a 500-basis point increase from the previous year. This has contributed to a rise in the months of supply, though the low number of listings is preventing major price drops. While some price reductions could occur in the coming months, widespread decreases are unlikely due to the limited competition. As a result, lower mortgage rates are being offset by high home prices, keeping homeownership out of reach for many. Meanwhile, luxury-tier apartments are benefiting from this trend, with demand remaining steady as higher-income households opt to rent rather than buy.
Keypoints:
Home sales decline: Existing home sales dropped by 3.3% year-over-year in August 2024, hitting an eight-month low.
Mortgage rates fall: The average 30-year fixed-rate mortgage fell to 6.5% in August but failed to boost buyer demand.
Record-high home prices: The median price of a single-family home increased by 2.9%, reaching an all-time high of $411,500.
Tight housing inventory: Housing inventory stayed below 1.1 million for five consecutive months, keeping prices elevated.
Luxury rentals benefit: As homeownership becomes more difficult, higher-income households are opting for luxury apartments, maintaining strong demand in this rental sector.
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Anna & Peter Tan
SuiteLifeMF has acquired, operated and invested in real estate for over 10+ years, investing in over 1500 doors and with over US$ 100 under management (900+ doors). The company also operates a property management company which handles a portfolio of single family homes. SuiteLifeMF maintains a disciplined approach to investing, which focuses on capital preservation and strong returns with a deep understanding of submarkets, economic and political situations.
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