What will the Future Bring?
- Pent-up demand, settlement agreement will be factors.
– Home sales in 2023 were the worst in nearly 30 years. The micro-level reasons—owners locked into low mortgage rates, low inventory, and rising interest rates—explain the fall in sales.
– But looking at the big picture, it makes less sense. Last year’s 4 million existing-home sales were the same as in 1995, when there were 70 million fewer people living in the U.S.
– The massive stored-up housing demand could easily mean increased home sales in eight of the next 10 years.
– In February, existing-home sales rose 9.5% from the prior month even after accounting for seasonal factors and a leap year. The increase was helped by a 10% inventory boost. (One regional exception was in the Northeast, where sales fell by 10%. But this region also had the largest home price gain because of lack of supply and a wider prevalence of multiple offers.)
– One issue to monitor is consumer response to the rules of the new settlement agreement. Sellers and buyers clearly benefit from a cooperative arrangement between the listing broker and buyer broker, and the settlement was able to maintain consumer choice with respect to offering compensation off-MLS.
– In the near term, the dynamics are hard to predict. But I believe sellers will continue to see the value of cooperation when listing agents clearly explain the benefits, such as increasing housing opportunity and widening the potential buyer pool.
- First-Timer Share Drops Again
– Existing-home sales increased in February. Yet first-time buyers’ share of the market declined to 26%, down from 28% in January. According to NAR’s 2023 Profile of Home Buyers and Sellers, first-time buyers made up 32% of the market from July 2022 to June 2023, while the historical norm is 38%.
Supply & Demand
Realtor Magazine(Spring)
All trend lines are national from February 2023 to February 2024.
All-Cash Sales in February
All-cash sales made up 33% of transactions in February, up from 32% in January and 28% a year ago. This is the second month of elevated all-cash sales and the highest share since March 2014.
