Real Estate Market Update: September 2024

We’ve reached a major economic milestone! 

The Federal Reserve announced its first interest rate cut in four years—an aggressive half a percentage point. The Fed has signaled just one rate cut this year, but more are likely.

Chairman Jerome Powell called the recent move “strong” but not indicative of the pace of future rate changes. "We don't think we're behind," Powell said. "You can take this as a sign of our commitment not to get behind."

Mortgage rates began falling early in anticipation of September’s rate cut, easing affordability challenges. With the recent cut, rates could fall even further. However, this could ignite fierce competition among homebuyers.

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

September Housing Market Trends

Home sales have slowed down, but that shouldn’t last for long!

Existing Homes

In August, the median existing-home price rose 3.1% year-over-year to $416,700—the 14th consecutive month of yearly price gains, according to the National Association of Realtors. 

Realtor.com’s August housing data also noted that the median price per square foot grew by 2.3%, indicating that the inventory of smaller and more affordable homes continues to grow.

NAR reported that listing activity slowed down in August, dropping 2.5% and 4.2% from a year ago. 

“Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months,” said NAR Chief Economist Lawrence Yun.

New Construction Homes

Lower mortgage rates have encouraged builders! This is great news for the new construction market.

Overall, housing starts increased 9.6% in August compared to the previous month, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Single-family starts were also up 15.7% from July’s revised figure. On a year-to-date basis, single-family starts increased by 10.4%.

Despite higher builder sentiment, the cost of construction remains elevated. Because of this, fewer builders are cutting prices and offering incentives. However, the Federal Reserve is expected to begin easing monetary policy, which could help lower interest rates on land development and home construction, the National Association of Home Builders (NAHB) reported.

Housing Inventory

Inventory continues to climb! There’s been some slight deceleration since July’s peak, and it’s not back to pre-pandemic norms as of yet, but this is still positive news!

There were 35.8% more homes actively for sale on a typical day in August compared to the same period last year, Realtor.com reported. This is the highest level since May 2020. Unsold inventory, including homes under contract, increased by 20.9% year-over-year.

Mortgage Rates

As of Sept. 19, mortgage rates have fallen by about half a percent over the last month. Currently, the rate on a 30-year fixed-rate mortgage is 6.09%—the lowest since Feb. 2023, according to Freddie Mac’s Primary Mortgage Market Survey.

Rates will likely continue to ease because of the Fed’s latest decision to cut interest rates by 50 basis points. Right now, prospective buyers continue to wait on the sidelines and jump in when they find the perfect opportunity.

Experts say homeowners may be more willing to sell (which would significantly boost inventory!) once rates drop below 6%. HousingWire reported that to get to that level, or even below 5.75%, we’ll probably need more economic weakness, better mortgage spreads, and a more doveish Fed.

DC Housing Market Update

The D.C. housing market saw a drop in sales despite more choices as supply continues to increase. Home prices are still increasing, but lower mortgage rates have given consumers more buying power.

Data from the Northern Virginia Association of Realtors (NVAR) August 2024 market statistics report shows that the median home price in August was $738,000, a 5.4% increase over the last year. Inventory reached 1.4-month’s supply, up from 1.08 months last August. This is higher than the five-year average of 1.2 month’s supply, which has helped meet strong demand in the region.

According to NVAR, the 2024 real estate market in Northern Virginia continues to be characterized by month-to-month fluctuations in home sales. Affordability is the biggest concern, but as mortgage rates come down, we should see home sales increase.

How Office Foot Traffic Affects Real Estate

A new article on Realtor.com using Placer.ai data revealed that Americans are heading back to the office at record levels, and it’s having an impact on where people live and shop for homes, including Washington, D.C. (+73.9%)!

“The pandemic seems to have shifted buyer preferences to some degree,” says Hannah Jones, Realtor.com senior economic research analyst. “Many home shoppers are looking to balance their personal and professional lives by buying in areas that are close enough to the office to commute a few days a week, but offer more space, lower prices, and a slower-paced lifestyle than a large metro.”

For those who work in D.C. proper, people are now turning to nearby suburbs, including Arlington and Fairfax! We should see more activity here in our local market, especially as the election draws closer.

More Buyers Are Jumping Into the Market

Lower mortgage rates and market expectations of a rate cut from the Fed have already changed housing demand.

According to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 13, 2024, the seasonally adjusted Purchase Index increased by 5% from the previous week, and the Refinance Index increased by 24% during the same period and 127% from a year ago.

Mortgage rate declines have made purchasing a home slightly more affordable again, and the recent shift from a seller’s market to a neutral market has given buyers more of an edge. As more homes hit the market, buyers are now willing to test the waters.

The Best Week to Buy a Home, According to Research

If you’re waiting to buy a home until after the election, you may way to reconsider.

Purchasing a home the week of September 29 through October 5 could (potentially) save you $14,000, according to a report by Realtor.com.

Based on historical trends, the first week of October might see a 37% boost in active listings than at the start of the year. Buyers could save over $14,000 this week compared to the summer peak home price of $445,000.

The best week tends to bring more buyer-friendly conditions, and 50,000 homes could see price reductions based on inventory estimates. This translates to a monthly price-reduced share of more than 22%. 

However, if we see more buyers than normal entering the market, price reductions may be lower than data suggests.

Final Thoughts

Although the housing market has yet to heat up this summer, that may change soon!

The Fed’s jumbo-sized rate cut is the first since the pandemic, marking an important shift in economic recovery. This should help push down mortgage rates, but it could also create a surge of demand that clears away all inventory gains.

Returning to “normal” rates could take time, and experts say 2025 will be a better year for the housing market.

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.