Did today’s Existing Home Sales report give you a strategy for housing in 2024? I would argue that it does. And today’s housing market looks a lot like what we saw in late 2022. But this time, federal reserve The rate hike cycle is over, so there’s no need to worry about another Fed governor. CNBC They lament that by 2024, mortgage interest rates will be around 6%, making life difficult. Now let’s take a look at the playbook.
from National Association of Realtors (NAR):total Used home sales – Completed transactions including single-family homes, townhomes, condos and co-ops – rose 0.8% from October to a seasonally adjusted annual rate of 3.82 million in November. Year-over-year, sales decreased by his 7.3% (down from his 4.12 million units in November 2022)
Here are some charts from today’s report:
So is this a repeat of last year? Yes, to some extent. In 2022, we recorded his biggest one-year drop in home sales in history. After that, sales stopped decreasing around his 4 million. This is an important level that I’ve been talking about for years. Sales recovered significantly once in 2023, but then sales tended to decline throughout the year as mortgage interest rates rose from his 6% to 8%.
Now that mortgage rates have fallen by about 1.5%, we’re seeing existing home sales hit an extreme bottom. Purchase requisition data has continued to trend positively over the past six weeks. This bodes well for the future, especially if this can continue into spring.
Because so many people are predicting a significant price crash in 2023, as certain groups continue to insist that prices follow volume, we have created a weekly tracker article to guide people forward. did. That’s partially true, but the biggest price crash that was accompanied by the biggest sales crash in 2022 was not going to happen in 2023. More information will be provided in the next article. this interview On why I think the dynamics of the housing market changed on November 9, 2022. Mortgage rates fell in the second half of 2022, producing positive and encouraging data. People disagreed with it and were caught off guard months into 2023. So let’s avoid making that mistake in 2024.
Let’s look at some other important data lines.
from NAR: In November, 31% of sales were from first-time buyers. Private investors bought 18% of the homes. All-cash sales accounted for 27% of transactions. Distressed sales accounted for 1% of sales. Usually the property remained on the market for his 25 days.
Day on the market has always been an important data line for me. I never want to see trends like this at the teenager level. That means there aren’t enough homes to sell, or a massive credit sales boom that would lead to bankruptcy. Sales have not been strong for the past two years. Too many people are chasing too few homes. But the fact that this is over 19 days is a good thing. I would like about 30 to 45 days. This data line is highly seasonal and rises in the second half of the year. I hope it will be on the market for a few months within the next 30 days before the spring sales season gets into full swing.
NAR: The median existing home price for all housing types in November was $387,600, an increase of 4.0% from November 2022 ($372,700). Prices rose in all four of his regions of the United States.
Of course, the median sales price always varies by season. We had more solid data at the beginning of the year and weaker data in the second half, but prices remained fairly strong even with mortgage rates at 8%. As we have often discussed in our weekly tracker data, while mortgage rates have been rising at an accelerated pace, year-on-year price declines have remained 4% below 2022 levels. According to market data, there were no stressed sellers in 2023.
NAR: The total housing inventory at the end of November was 1.13 million units, a decrease of 1.7% compared to October, but an increase of 0.9% compared to a year ago (1.12 million units). At the current sales pace, there will be 3.5 months worth of unsold inventory, which is down from 3.6 months in October, but up from 3.3 months in November 2022.
To those screaming 2008 is housing: Remember, there were 4 million active listings in 2007, and the annual monthly supply in 2008 was 10.8 months. In 2011, there was 105 days on market and a large amount of distressed supply. , job losses and recession are hitting the market. Currently, the total number of active listings is 1,130,000, monthly supply is 3.5 months, and days on market are 25 days. Reading is good.
So today’s existing home sales report is better than expected and seems about right to me. The growth in purchasing application data seen over the past six weeks is not fully reflected in this report because it takes 30 to 90 days for purchasing applications to reach sales data. So let’s look at 2024 the same way we looked at the housing market on November 9, 2022. The market dynamics are changing, so we will follow the upcoming weekly housing data until it turns negative.