From cash deals to builder confidence, housing market signals new chapter

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Published Date 12/23/2024

Sometimes what seems to be denied is only delayed. As Realtor Magazine’s Melissa Dittmann Tracey reports, momentum is building in the real estate market as improving economic conditions encourage home buyers to make a move.

“The housing market is warmer than usual this time of year: Home sales posted a significant jump in November, marking the second consecutive month of increases following a nearly frozen market in the summer,” says Tracey. “Existing-home sales, which account for completed transactions for single-family homes, townhomes, condos and co-ops, rose 4.8% month over month and 6.1% annually in November,” she reports citing data from the National Association of Realtors.

“Home sales momentum is building,” says NAR Chief Economist Lawrence Yun. “More buyers have entered the market as the economy continues to add jobs, housing inventory grows compared to a year ago and consumers get used to a new normal of mortgage rates between 6% and 7%.”

The housing market is showing signs of resilience and potential growth as 2024 draws to a close. November saw existing-home sales prices climb 4.7% compared to the previous year, reaching a median of $406,100. This price appreciation has contributed to a remarkable $15 trillion increase in housing equity over the past four years, empowering many homeowners to seek properties better suited to their changing needs.

Market competition remains robust in certain regions, with properties receiving an average of 2.1 offers, says Tracey. “About 18% of homes sold above list price in November, while more than one-fifth of buyers waived inspection or appraisal contingencies to strengthen their offers. The market is seeing increased participation from various buyer segments, with cash purchases accounting for 25% of transactions, and investors or second-home buyers making up 13% of these cash sales.”

First-time homebuyers are making a comeback, representing 30% of November sales—up from 27% in October, though still below the historical average of 40%. Buyers are finding more options as inventory levels have increased by nearly 18% year-over-year. This expanded choice has led to a slight slowdown in sales pace, with properties typically spending 32 days on the market, up from 25 days a year ago. Nevertheless, more than half of homes are still sold within a month.

Tracey reports that regional performance varied across the country, with the Northeast leading in price appreciation at 10% year-over-year and a median price of $475,500. The Midwest saw a 7.3% price increase to $302,000, while the South experienced more moderate growth of 2.8% to $361,300. The West, despite having the highest median price at $628,200, showed a modest 4% annual increase.

Looking ahead to 2025, Tracey says industry experts express growing optimism. Home builders' confidence is approaching a three-year high, with single-family home construction up 7% from the previous year. To attract buyers, 31% of builders reduced prices by an average of 5%, and 60% offered incentives such as mortgage rate buydowns. The NAR anticipates a stronger market in 2025, characterized by increased sales, moderate price growth, expanded inventory, and mortgage rates expected to stabilize in the low 6% range.

RealtorMag, TBWS

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