Inventory, new listings, sales, and prices all dipped this week. The fall season is upon us. The election took a lot of lives last week, and that slowed down some listing and sales activity, and we had rising mortgage rates.
It’s actually not uncommon for housing activity to dip in the first week of November and pick up slightly in the following week. Given the confluence of trends right now, I expect inventory and new listings to reappear before the end of the month.
Now I look forward to 2025 when the data comes in every week. I have questions about the future of both sales volume and home prices. We’ll be releasing the HousingWire 2025 forecast paper in the next week or so where we’ll lay out our expectations, trends, and data we’ll be tracking for the housing market over the coming year.
Let’s look at the data for the first full week of November 2024.
Asset growth
Rising interest rates create rising inventories. Rising prices dampen demand for homes and when demand slows, inventory grows. This has been true for the entire year, starting in the fourth quarter of 2023. During that time, mortgage rates increased from 6.5% to 8% and inventory increased. Those high prices and rising inventory trends continued through most of 2024 with only a small acquisition in September.
We are also in the seasonal downturn of the housing market. It’s really hard for inventory to go up past Thanksgiving. We have two more weeks where I expect more unsold homes to come on the market.
But this week, unsold, single-family homes nationwide fell nearly 2% to 722,000. Election week slowed the number of new listings, fewer sales were completed, and there was an even higher number of withdrawn listings – once, the total number of homes on the market declined. Any new listings that were delayed have now been listed, so we’ll see the listings repackaged next week. I expect 728,000 or more next week. People have been delayed listing for only a few days, and buying conditions are worse than they have been lately.
There are 28% more homes on the market than last year. Inventory was still growing every week in November 2023. Remember that 2024 inventory was over 40% more than 2023, and is now 28%.
New listings are rejected
We counted 49,000 new listings for single-family homes this week, which was a sharp drop from recent trends. That’s about one week because of the election. I expect a small rebound next week back to maybe 55,000 or so.
But this week, the number of new listings dropped by 20% for the week. There were fewer new sellers this week than last year for the first time. Although it is a remarkable week, it is only one week and it will go back. This is not a sudden trend of very few sellers. We’re two full weeks away from Thanksgiving, and it’ll be December before we see big dips for the holidays.
We are now looking to 2025, with the expectation of continued growth in merchant volume. Multiple sellers and large inventory are the trend of 2025.
A new dip waiting
Sales levels have decreased along with the level of new supply this week. We are looking for new contracts here. We counted 51,000 new sales started this week for single-family homes and another 10,000 condo sales contracts. That speed is down significantly from last week. And in fact we counted 2% fewer sales that started this week than the same week last year.
The latest average is 58,000 single-family home sales initiated each week. That’s an average of 10% over recent years in November. One negative showing broke our 10-week streak of year-over-year home sales growth, but it hasn’t reversed the trend.
On the other hand, as mortgage rates rise, maybe this fall it will go back to the low selling mode. We have been disappointed by the discovery of fakes over the past three years. A reversal of our sales growth trend is off the table. Although I’m still waiting for the number of new waiting lists this week of November 10, If we don’t get it, that will be a clear signal from home buyers.
Even house prices have fallen
Home prices dipped with market activity during election week as well. The median price of single-family homes that went under contract this week — those 49,000 that were recently sold — fell a few percent this week. As with inventory and sales volume, I expect a price rebound next week. At this rate, even including the big dip this week, home prices are 4% above this time last year at $380,000.
I expect prices to go up again next week with a lot of volume, but if that doesn’t happen, that will be another sign that the jump in mortgage rates this quarter will hurt home buyer demand.
The price cut is—you guessed it—down
Although home prices fell this week, it may be due to lower activity overall. One way to test that assumption is to look at discount rates. If retailers accelerate price cuts, that would be a weak signal. In fact, the price cuts went down again this week.
We are down to 38.8% of homes on the market with price reductions. That’s less than last week and less than last year. We use price reductions as a leading indicator of future sales prices. Although 38.8% is still above average which tells us what we already know and that demand for housing is still weak, the trend nationally is for a few price cuts this fall. Recently as homes have been sold or withdrawn from the market the percentage of listings that have taken a price reduction from the original list price appears to be low.
This tells us that the current expectations of consumers are that sellers expect the price to continue in 2025. There are no signals in the data that house prices are falling significantly.
As we look to 2025, it looks like we’re set for another year of tough affordability. If you focus exclusively on shopping, it’s hard to imagine how home prices can stay so high. Domestic consumers are stretched and as long as prices remain high, demand will be limited. There are some forecasters who use affordability as a guide to predict whether home prices will drop in 2025 and 2026. At HousingWire, we’re about to publish our 2025 housing market forecast paper that covers all of these ideas.
Mike Simonsen is the founder of Study of Altos.
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