The housing market is waiting for elections
There are 28% more homes on the market than a year ago. In November 2023, the stock was still growing every week. Consider that the stock in 2024 was a whopping 40% higher than it was in 2023, and now it is 28%.
New entries have been rejected
We counted 49,000 new single-family home listings this week, which was a big drop from recent trends. That’s probably a one-week dip because of the elections. I expect a small rebound next week, back to maybe 55,000 or so.
But before this week, new listings dropped 20% in a week. This week, for the first time in a while, there were fewer new sellers than last year. Although it is a remarkable week, it will only last one week and it will bounce back. This is not suddenly a trend of dramatically fewer sellers. We still have two full weeks until Thanksgiving, and it will be in December before we see the big dips for the holidays.
We now look to 2025, with expectations of continued seller volume growth. More sellers and a larger inventory is a trend for 2025.
New dip pending
Sales figures fell this week along with the new offerings. Here we look at the new current contracts. We counted that 51,000 new sales started this week for single-family homes, plus another 10,000 sales contracts for apartments. That pace is considerably lower than a week earlier. And in fact we counted that 2% fewer sales started this week than in the same week last year.
The recent average is that 58,000 single-family homes are sold every week. That is an average of 10% more than in November in recent years. One bad performance breaks our 10-week streak of year-over-year home sales growth, but it doesn’t reverse the trend.
On the other hand, with mortgage rates skyrocketing, we may return to a low-sell mode this fall. We have been disappointed with false chargebacks for the past three years. A reversal of our revenue growth trend is not off the table. While I still expect a recovery in the number of new open applications for this week of November 10, it will be a clear signal from home buyers if we don’t get one.
Even house prices fell
Home prices also fell during election week due to market activity. The average price of single-family homes that started contracts this week – which are selling 49,000 new – fell a few percent this week. Like inventory and sales volume, I expect a price recovery next week. By this measure, even including this week’s big dip, home prices are currently 4% above last year at $380,000.
I expect prices to rebound next week with the increased volume, but if that doesn’t happen, it will also be a signal that the steep rise in mortgage rates this quarter is taking a toll on homebuyer demand.
Price reductions – you guessed it – were ticked off
Although home prices fell this week, this is likely due to overall lower activity. One way to check that assumption is to look at the levels of price reductions. If sellers accelerate their price cuts, that would be a weakening signal. In fact, price cuts tapered off again this week.
We only have 38.8% of homes on the market with price reductions. That is less than last week and less than last year. We use price reductions as a leading indicator of future sales prices. While 38.8% is still above normal, which tells us what we already know, namely that housing demand is still weak, there will be fewer price cuts nationally this fall. As homes have recently been sold or taken off the market, the percentage of homes that have experienced price reductions from the original list price is declining.
This tells us that current buyer expectations are that sellers are lining up for continued price stability through 2025. There are no signals in the data showing that home prices are falling dramatically.
As we look to 2025, it looks like we’re heading into another year of tough affordability. If you focus specifically on affordability, it’s hard to see how house prices can remain high. Home buyers are under pressure and as long as prices remain high, demand will be limited. There are a number of forecasters who use affordability as a guideline to assume that house prices will fall in 2025 and 2026. At HousingWire, we are about to publish our 2025 housing market forecast, which covers all these perspectives.
Mike Simonsen is the founder of Altos Research.
