There is good news on the real estate market at the end of 2024: there is a lot more supply. The bad news: Much of this inventory is obsolete and remains unsold for much longer than usual.
Active listings in November were 12.1% higher than November 2023, reaching their highest level since 2020, according to a new report from Redfin.
However, more than half of these homes (54.5%) sat on the market for at least 60 days without a purchase contract being finalized. That's the highest share since November 2019 and an increase of nearly 50% from the previous year, the report said.
The typical home that actually went under contract did so in 43 days, the slowest November pace since 2019, according to Redfin.
“Many of the offerings on the market are either outdated or uninhabitable. There is a lot of inventory, but it doesn’t seem to be enough,” said Redfin agent Meme Loggins, who was quoted in the report. “I explain to sellers that if the price is not fair, their home will remain on the market. Well-priced homes in good condition disappear from the market in three to five days, but overpriced homes can sit for over three months.”
According to Mortgage News Daily, mortgage rates rose over 7% in October and largely stayed there through the end of the year. Real estate prices also continue to rise. S&P CoreLogic Case-Shiller's latest monthly price report, released Tuesday, showed prices rose 3.6% nationwide in October compared to the same month last year.
“With the latest data covering the period leading up to the election, our national index has shown continued improvement,” said Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices. “The removal of political uncertainty risk has led to a stock market rally; it will be revealing if a similar sentiment emerges among homeowners.”
According to the National Association of Realtors, pending home sales, which are signed contracts to purchase existing homes, rose to their highest level in nearly two years on both a monthly and annual basis in November. However, they came from a very slow base. The brokers claim that interest rates have now reached a new normal.
“Consumers appear to have recalibrated their expectations for mortgage rates and are taking advantage of greater available inventory,” said Lawrence Yun, NAR chief economist. “Mortgage rates have averaged over 6% over the past 24 months. Buyers are no longer waiting for mortgage rates to drop significantly or expecting them to drop significantly. Additionally, buyers are in a better negotiating position as the market moves away from a seller’s market.”
However, the slower pace of sales does not bode well for the new year, especially as interest rates remain high. There's still demand, but according to another Redfin report, renters are staying renters longer due not only to higher real estate prices, but also higher prices for agents and movers.
According to a year-end report from CoreLogic, the seller lock-in effect, in which some sellers are unwilling to trade in their low mortgage rates to move, began to subside in 2024, but that was largely due to life events or the need to tap accumulated equity. The additional inventory didn't have much of an impact on sales because costs got in the way.
“Buyers are struggling to keep up with property prices. Adjusted for inflation, the cost of owning a home is currently at its highest level in decades. This sustained increase in prices and interest rates has created a challenging environment for both first-time buyers and those looking to get on the real estate ladder,” CoreLogic chief economist Selma Hepp wrote in the report.
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