Housing Market Update – May 29, 2024

National Home Data

The Case Shiller Index showed home prices rising a seasonally adjusted 0.3% in March, reaching another all-time high. The non-seasonally adjusted appreciation number increased by 1.3%  in March, showing home appreciation accelerating rapidly this spring. Prices are up 6.5% year over year. FHFA released their House Price Index which showed home prices rising a more modest 0.1% in March and 6.7% year over year. The FHFA index excludes homes purchased with jumbo loans and purchased with cash.

New Home Sales fell 4.7% in April and are now down 7.7% yearly. The New Home Sales report measures signed contracts on new homes and tends to trend up or down inversely with mortgage rates. As rates were higher in April, it’s not surprising that new home contracts declined. Additionally, a decline in sales doesn’t necessarily mean a decline in demand, as new home inventory remains tight, with a 1.85-month supply currently on the market.

Existing home sales showed the median home price rose 3.7% from last month and up 5.7% year over year. Sales in April fell 1.9% to an annualized pace of 4.14M units and were down 1.9% yearly. The drop in sales is likely due to rising rates throughout the beginning of the year. Assuming higher rates were the reason for the decreased activity, we could see a bounce back as rates have moved lower over the past few weeks.

Inventory remains tight; however, we are seeing signs of improvement as the data showed an increase of 9% from last month and up 16% from this time last year. While national numbers show reasons to be optimistic that homebuyers will have more options, we still see a competitive housing market for homebuyers throughout most of the West Coast. Homes are selling more quickly as the average days on the market dropped from 33 days in March to 26 days in April. Competitively priced homes continue to have multiple offers often selling above list price.

CoreLogic released its Rental Report for March, which showed the first decline in 14 years, with rental prices dropping by -0.6% yearly. Mortgage rates have remained stubbornly high due to higher-than-expected inflation, and the main culprit has been shelter costs, which are influenced heavily by rental prices. If this trend continues, eventually, we should see a decline in the shelter component of the inflation data, which makes up almost half of the Consumer Price Index (CPI).

Housing Starts rose 5.7% in April and were down 0.6% year over year. Single-family starts came in flat and were up 18% year over year. Housing starts are volatile, with wild swings from one month to the next, but tracking the year-over-year number gives us an idea of future inventory hitting the market. Overall, the building pace is way below what is needed to support new household formations and keep up with demand. While this supports housing prices, it greatly strains first-time homebuyers and overall housing activity.

Core Logic Home Price Insights reported that home prices rose a robust 1.2% in March and are up 5.3% year over year. Appreciation across the board is accelerating, which is expected during the busy spring buy season. Black Knight also reported home prices rising 1.2% in March and showed prices up 5.6% year over year. This data backs up what many buyers are realizing. The cost of waiting far exceeds the potential benefit of waiting to buy when rates move lower in the future.

Since the beginning of the year, we have seen a strong increase in buyer demand. Many who were holding out for rates to move lower have decided to stop waiting for fear of home prices continuing to move higher, and that’s exactly what the data is showing.

2023 National Home Appreciation Numbers:

Case Shiller: 5.6%

FHFA: 6.6%

CoreLogic: 5.5%

Black Knight: 5.6%

Local Housing Data

Local housing prices appear to have stabilized and, in some cases, are showing signs of moving higher, albeit at a more moderate pace than we’ve seen over the past several years. Inventory remains tight, and we continue to see more buyers than sellers. Markets and trends can vary depending on where you’re looking, so we provide some key indicators below broken down by county so you can see what your market is currently doing.