Real Estate Market Update: July 2024

We’re seeing a shift in the housing market! 

As would-be homebuyers pull back amidst price concerns, sellers are more willing to negotiate and reduce asking prices. More homes are being listed for sale, but home sales haven’t picked up yet. Experts predict mortgage rates to go down later this year, and home price growth to decelerate on a national level, but still remain positive.

Want the latest real estate news? Here’s the housing market update for July 2024!

July Housing Market Trends

Sellers are losing the upper hand in this market.

“We're seeing a slow shift from a seller's market to a buyer's market,” said National Association of Realtors (NAR) Chief Economist Lawrence Yun in a recent report. “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.”

Existing Homes

According to the NAR report, almost all major regions reported sales declines in June, dropping 5.4% that month and also by 5.4% year-over-year. The existing-home sales price increased by 4.1% in June over the past year to $426,900—the second consecutive month it reached an all-time high and the 12th straight month of year-over-year price gains.

Although the median home price reached a new record high, Yun believes large accelerations are unlikely due to supply and demand nearing a more balanced market condition.

New Construction Homes

Sales of newly built, single-family homes fell by 0.6% in June, according to the National Association of Home Builders (NAHB). The pace of new home sales in June was also down 7.4% from the previous year. The median home price was $417,300, a 2.5% increase compared to May, but largely flat year-over-year.

Single-family starts also decreased by 2.2%, but they’re up 16.1% year-to-date. The NAHB said home builders are concerned about the current interest rate environment but believe that inflation and mortgage rates will moderate and lead to increased construction toward the end of 2024.

Housing Inventory

Total housing inventory continues to rise, growing by 3.1% in June compared to the previous month, and 23.4% from a year ago, the NAR reported. There’s currently a 4.1-month supply at the current sales pace, up from 3.7 months in May. A more balanced housing market generally has a six-month supply of inventory.

New home inventory represents 21% of total inventory, according to the NAHB. Completed, ready-to-occupy home inventory is up 50% over the past year, representing 9.3 months’ supply at the current building pace.

Mortgage Rates

Mortgage rates have come down slightly from the same time last month, and have decreased nearly half a percent from their peak earlier this year, according to Freddie Mac’s Primary Mortgage Market Survey. As of July 25, the interest rate on a 30-year fixed-rate mortgage is 6.78%. Freddie Mac stated that despite these lower rates, would-be buyers have still hit pause on their purchase plans.

DC Area Housing Market Update

In June, the Washington, DC, housing market was comparable to the national market. 

According to the Northern Virginia Association of Realtors (NVAR) June 2024 market statistics data, home sales dropped 13.8% between June 2024 and June 2023, and listings are also down by 9.4%. The median price increased by 8.6% to $780,000, and the housing supply also rose by 4.98%, representing 1.3 months of housing inventory. Pending sales are nearly 10% higher than last year, and the average days on market is 14 days, up by 7.7%.

But DC’s housing market is “becoming a little bit easier for buyers,” according to experts at Redfin. In the DC metro area, the average sale-to-list price is around 101% of the asking price, and the DC market is showing some signs of cooling. 

However, homes are still selling quickly, and the number of active listings is up. The likelihood of homes selling for under the asking price is rising, but that’s because there’s more supply than demand for certain types of homes.

Potential Rate Cuts Coming in September

A report from the Bureau of Labor Statistics revealed that employers are adding fewer jobs, indicating a slowing job market. Now, bond investors who fund most mortgages are convinced the Federal Reserve will cut rates as early as September, Inman reported.

Forecasters at Pantheon Macroeconomics anticipate a rate reduction of 1.25 percentage points this year, beginning with a 25 basis-point cut in September, and 50 basis-point cuts in November and December.

According to the CME FedWatch Tool, the odds of a September rate cut are about 88%. This is great news! Once the Fed starts cutting rates, we should see mortgage rates come down even further!

Homes Are Sitting on the Market Longer

A recent Redfin report shows that nearly two-thirds (64.7%) of home listings have been sitting on the market for over a month. This is up 60% compared to a year ago. Redfin blames stale listings on high housing costs dampening demand.

Record-breaking home prices and higher mortgage rates are pushing buyers to the sidelines. Demand has slowed, but supply has ticked up. 

In June, buyers were even backing out of deals at record rates, Redfin noted. About 56,000 home purchases were canceled, which totaled to 15% of homes that went under contract that month. Approximately 20% of homes for sale last month also had price cuts. Sellers are more willing to cut prices the longer their homes sit on the market.

Luxury Home Prices Reach All-Time High

Home prices are rising across the board, but luxury home prices jumped 9% to an all-time high, according to Redfin.

Luxury home prices rose 8.8% year-over-year in the second quarter, which was more than twice as fast as non-luxury homes. Luxury homes sat on the market longer than a year ago, but sales also grew by 0.2%. At the same time, sales of non-luxury homes fell.

There’s strong demand for fairly priced high-end properties. The beautiful, move-in-ready luxury homes are still receiving multiple offers.

Housing Market Predictions 2024

Would-be homebuyers are frustrated, but the tide may be turning soon.

The NAR reported a slow shift to a buyer’s market, and more sellers are willing to negotiate as homes sit on the market long and receive fewer offers. Although sales are slow, I don’t see anything crazy happening soon. Increasing inventory could take the pressure off prices. That combined with potentially lower mortgage rates later this year and early next year will definitely help ease affordability challenges.

Looking to buy or sell in the DC area? Don’t navigate the complexities of the current housing market alone! Reach out today for expert real estate leadership.