By Mike Bodeen · 11 December 2023
Prices Not So Much
The major real estate news lately is the significant lowering of mortgage rates to the low 7% to high 6% range. This is reflective of positive inflation reporting. It’s good news for buyers, but is it enough to entice them to move in large numbers? And if not, what interest rate would?
To have any accurate idea about where our market is trending and how lower mortgage rates may affect it, we may have to wait until after the first of the year.
Here are the November sales numbers including new home sales:
Active Listings: 15,981 vs 19,155 last year – down 17% – but up 4.8% from 15,247 last month (November)
Under Contract Listings: 5,867 vs 6,352 last year – down 7.6% – and down 2.7% from 6,028 last month
Monthly Sales: 4,616 vs 4,928 last year – down 6.3% – and down 11% from 5,210 last month
Monthly Average Sales Price per Sq. Ft: $289 versus $272 last year – up 6.1% – but down 2.1% from $295.13 last month
Monthly Median Sales Price: $439,000 vs $420,000 last year – up 4.6% – and up 0.9% from $435,000 last month
There were 1,220 new home sales, down 11% from 1,364 in November 2022 and down 18% from October. (County Affidavit of values – not ARMLS)
The new home median sales price was $505,050, down 4.7% from November 2022 and down 0.7% from October. (County Affidavit of values – not ARMLS)
What may be standing in buyers way is that the median sales pricing for resale homes is not dropping. It rose again almost 1% compared with October, the previous month.
Lower mortgage rates obviously help affordability, but by how much is yet to be seen. My professional concern is an echo of what we’ve been sharing recently; that if many more buyers can move into the market, inventory could start to decrease again, negatively affecting pricing for buyers. A classic Catch 22.
If rates drop to 6% or lower, I think that is the number that floods the market with many pent-up buyers. Is that possible? Absolutely. Consider that our rates have already dropped a full percent and the Fed has not yet begun to reverse course in their monetary policy which many believe can happen starting in early 2024.
Perhaps the bigger question for our market is at what rate will current homeowners decide to sell and give up their current low mortgage rate? These homeowners are the main log jam in getting significant supply back on the market.
We may soon find out.