Cue a procession of angels: US existing home sales notched a meaningful gain for the first time in 11 months.
If you can’t narrate this story on your own, you’re not paying very close attention. Resale inventory in the US is severely constrained as elevated financing costs disincentivize would-be sellers, leading to a dearth of supply which has in turn supported prices. High prices are an impediment for buyers already constrained by the same high mortgage rates. And, so, sales of previously-owned homes were severely depressed last year.
Rates have come down since November, but probably not enough to bring a lot of supply onto the market. Most homeowners enjoy rates that are far below the current 30-year fixed, so if you’re planning on financing any portion of a new residence, you’re not especially excited about trading a low rate for a higher one. As such, you might not sell.
But, the 3.1% increase in existing home sales for January reported by the NAR on Thursday might suggest the market’s tentatively thawing. The four-million rate was above consensus and counted as the briskest since August, when long-end Treasury yields embarked on what would become a brutal selloff, pushing up mortgage rates.
As the figure makes clear, gains are few and far between. Only time will tell if last month’s increase was a false dawn.
“While home sales remain sizably lower than a couple of years ago, January’s monthly gain is the start of more supply and demand,” NAR Chief Economist Lawrence Yun said Thursday. “Listings were modestly higher, and home buyers are taking advantage of lower mortgage rates compared to late last year.”
Do note: Months’ supply was actually lower last month than it was in December (3 versus 3.1, or 3.5 versus 3.6 seasonally adjusted).
Prices remain an impediment for buyers. The median was up more than 5% YoY to $379,100. That’s well off the pandemic bonanza high (nearly $414,000 in mid-2022) but a mile above pre-COVID levels.
January’s YoY price gains counted as the seventh consecutive and the pace was the fastest of that stretch, albeit nowhere near the kind of increases observed during “peak boom,” if you will.
Writing Thursday, Redfin’s Dana Anderson summarized the tension. “New listings rose 10% YoY during the four weeks ending February 18 [as] sellers are hoping to take advantage of high prices,” she said. “But many buyers are still sitting on the sidelines [as] daily average mortgage rates surpassed 7% for the first time since mid-December.”
In short: It’s too early to declare the beginning of any “normalization” process. Supply and demand remain hopelessly out of balance, and both sides of the equation are impeded by high rates. If rates fall, it could rekindle the frenzy given pent-up demand, thereby making price pressures worse and exacerbating what it’s fair to call a nationwide affordability crisis. If rates don’t fall, the stalemate will persist and the dearth of inventory will keep prices elevated anyway.
It’s a conundrum. A paradox. And a huge pain in the ass for countless families waiting in cramped apartments to realize an American dream that seems to slip further away with each agonizing year.
For the foreseeable future, the rate at which houses enter the market will probably be approximately equal to the rate at which baby boomers exit their mortal existence.
Good point but
I might add to your equation…. the rate at which boomers migrate to assisted living, nursing homes and the like.
Please fall please fall please fall so I can refinance
Sorry guys, we are living longer and enjoying life as retirees longer. We ain’t going no where and get off my lawn!
Time to poll the audience. As some of you know, I’ve been thinking about getting a spot in an NBA city so I can go hang out and see some games and get some new scenery every now and then. Opinions on this: https://www.zillow.com/homedetails/1-Virginia-Ave-APT-603-Indianapolis-IN-46204/114424308_zpid/?
Parking? Proximity to transit? Unit looks nice, building okay, setting unsure. Not much green around.
Well, apparently, the distance to the Pacers’ stadium is “Right out the back door.” That’s probably an exaggeration on the part of the sellers’ agent (most things are), but the rationale for the idea in the first place is to get close to a stadium. This does that. I wouldn’t need any “green” necessarily, and frankly I don’t expect any in Indy. Heh.
There was actually a nicer unit for sale at 550k last month in the same building and there’s a penthouse on the top floor that went for I think 2.3. The units themselves seem to be actually nicer than the building, or maybe it’s more accurate to say the architect’s aesthetics just don’t match mine.
I’ve been to two conventions in Indianapolis (8 and 12 years ago). Downtown area is pretty walkable and has some nice amenities. Outside of that small area, it’s like any other 2nd/3rd tier city in the US. You’d also be within walking distance of Lucas Oil for the Colts, but the NFL may not be your thing.
The condo itself looks quite nice.
Well, NFL isn’t my thing but I’d probably take advantage. Problem with my home city now is just that without pro sports or serious museums, etc., there’s nowhere to get “dressed up” and go. I’m not looking for tuxedo events, and I wouldn’t want to live in a major metro area year around, but it’d be nice to hang out “someplace that’s someplace” (so to speak) every so often. I’m not getting any younger over here unfortunately.
H- What about Memphis?
You seem like you would be a great fan of an “underdog” team- the Memphis Grizzlies. Plus, the team is owned by Robert Pera- the billionaire that I would be most interested in having lunch with! I made a fortune investing in Ubiquiti Networks and remain an investor in spite of the stock’s dismal performance the past few years ( because I still believe in the future prospects for UI- but that is another story).
Memphis is way cooler than Indianapolis, imho. Much more to do there- unless you want to pick up road biking ( Breaking Away).
https://www.zillow.com/homedetails/137-E-G-E-Patterson-Ave-Memphis-TN-38103/2056112805_zpid/?utm_campaign=iosappmessage&utm_medium=referral&utm_source=txtshare
There are modern high rise condo offerings, as well, in downtown Memphis – if a “loft style condo with brick walls” isn’t your thing.
I forgot to check to see if there was a large walk in closet- but with 3 bedrooms, you could always convert one bedroom to a closet 🙂
Based on your criteria, I’d throw out two cities: OKC and SLC.
OKC if you want to play the long game (a rapidly growing city but lacking in some areas in the short term) and have immediate access to the best NBA team for the cheapest price.
SLC if you want a place with infrastructure and culture (museums, restaurants) that’s already there. Lots of teetotalers and outdoors stuff, too.
I thought it was very light and spacious and modern. Also, high enough to enjoy some views. Open plan kitchens are not necessarily my thing though. I don’t know local prices for similar apartments though. Good luck. After COVID, the dressing up is still a pleasure
Thumbs up!
On the other hand…if you can forego the NBA requirement, you could choose a different city where the language barrier would form a comfortable moat between you and your fellow human beings. Madrid, Amsterdam, Munich…