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September Market Update 2024

Market Update

September Market Update 2024
After hitting record low affordability in June 2024, affordability began improving in August 2024. The median U.S. home price reached a record high in June 2024, as did the monthly cost of financing a median-priced home, even though mortgage rates weren’t quite at their highest level this year. Generally, prices tend to peak in June during any given year. It was no surprise, therefore, when prices declined slightly in July and August of this year. Additionally, during July and August, inflation lowered meaningfully with the anticipation of rate cuts. Over the past two months, the average 30-year mortgage rate fell 0.51%, which drastically improved affordability.
 
A rough but decent shorthand calculation for mortgage rates is that every 0.10% increase or decrease to mortgage rates equates to roughly a 1% increase or decrease in the monthly mortgage cost. This means that, over the past two months, the monthly payments on homes became approximately 5% cheaper.
 
Sales have been historically low since January 2023; so, even though new listings have also been depressed, inventory has grown to its highest level since 2020. At this time, homebuyers have more choice than they’ve had in years. Higher supply, lower price, and lower interest rates caused sales to increase every so slightly month over month, up 1.3%.
 
Sales may continue to increase, however, because of the improving conditions, and they are so low they almost have nowhere to go but up. The September Fed meeting brought what was hopefully the first in a series of rate cuts, and the housing market may fare extremely well next year due to the timing of the cuts. The inventory build-up will likely slow for the rest of the year; as is typical. We expect to enter 2025 with falling rates, higher inventory, and seasonally lower home prices, which should create a perfect storm for a hotter spring market.
 

The Local Lowdown

 
Single-family home inventory still implied a strong sellers’ market in the East Bay. Home prices haven’t been largely affected by rising mortgage rates after the initial period of price correction from May 2022 to January 2023. Since January 2023, the median single-family home price has increased 15%. Year over year, however, the median price was down 0.2% and sales are up 3%. Single-family home prices peaked in May 2021 and are currently at 16% below peak.
 
High mortgage rates soften both supply and demand, but home buyers and sellers seemed to tolerate rates near 6% much more than around 7%. Now that rates are declining, sales could get a little boost, but the housing market typically begins to slow as we move into fall.
 
As always, Arrive Real Estate Group remains committed to helping our clients achieve their current and future real estate goals. Our team of experienced professionals are happy to discuss the information we’ve shared in this newsletter. We welcome you to contact us with any questions about the current market or to request an evaluation of your home.

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