Even though this week there were 9% more newly pending home sales than the same week a year ago, home sales are ticking down for the season and look weaker than they did in October. Mortgage rates continue to move higher and that’s impacting buyers. I’m watching the data every week to see if the slight bump in market momentum we got a couple months ago will be sustainable into the new year, or if we’re hitting the brakes again.
We have a lot of signal already for 2025, which I share in today’s video.
For a deeper dive, I also recommend you go get HousingWire’s 2025 Housing Market Forecast: The Path to Home Sales Recovery, where we offer our predictions for home prices, sales volume, and more. The paper is free for HousingWire subscribers.
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I’m Mike Simonsen, I’m the founder of Altos Research. Let’s look at the data for the week of November 18, 2024. Please refer to the video below for all the charts I mention in this transcript!
There are now 722,000 single family homes unsold on the market around the US. That’s a tiny bit more than a week ago and almost 27% more inventory than last year at this time. Inventory peaked for the 2024 calendar year back in October and in most of the country the number of unsold homes on the market is moving lower for the season. Many Florida markets still have inventory building, Florida is on a different home buying seasonal pattern than the rest of the US, and has had a particularly crazy housing market year, so Florida is always a state to keep watch on.
This is the ten year view of inventory trends in the US. These are the unsold single family homes on the market for the last 500 weeks. It’s wild when you realize that we’ve now been past the pandemic housing boom longer than we were in it. You can see the recovery of inventory over the past three years and that we probably still have a couple more years before we fully recover to the unsold inventory levels that we used to have in the last decade. It took just two years of ultra low interest rates to eat up all the unsold inventory and probably five years for it to rebuild.
I mentioned we published last week the HousingWire 2025 market forecasts. One of the conclusions of that report is that we’ll see inventory growth in 2025 again. We see about 17% more homes on the market by the end of next year. That will get us closer to the old levels of unsold inventory and it’ll require some of the midwest and northeast markets to finally add some homes for sale. We don’t see another 30% gain in inventory like we’ve had this year, though that is possible if mortgage rates power higher from here for much of the year 2025.
One way we know inventory nationally isn’t on the path to grow faster than 17% is that there still aren’t enough sellers to get there. This week there were 52,000 new listings for single family homes unsold. That’s 6% more than last week and nearly 7% more than a year ago. When we add back in another 7500 new listings immediate sales - those are already in contract and not added to the active inventory, overall that’s just 3% more sellers than a year ago.
In order for total inventory to grow 17% in 2025, we need to average more sellers each week than we had in 2024. Year to date in 2024, we see 7.5% more sellers each week on average than in 2023 - that’s what we track in this new listings data. As of right now we expect that growth to continue in 2025. But the last two weeks actually underperformed with fewer sellers than needed. So that’s something we’re watching closely. Are there enough home sellers each week? In the chart here, you can see the red line is the weekly home seller new listings count for 2024. We want this line to move higher into the gray lines from past years, rather than bouncing along the bottom.
Frankly, it feels like the market is contracting a bit now in November. After the hurricanes, we got hit with spiking mortgage rates and a crazy election. We saw a little rebound in the new listings rate this week after the election but it was actually less of a rebound than I anticipated. A few more sellers emerged, but my gut says that many are done for the season and maybe will try again next spring.
There is one more week before the Thanksgiving holiday, so inventory and new seller volume could in fact tick up again before next Monday’s data report. There will be a big dip for Thanksgiving week and then a slight rebound of sellers listing in early December. The question is will it be enough?
We counted 53,000 new contracts pending for single family homes this week with another 11,000 condo sales. That’s a bounce up of almost 3% for the week after the election pause. We discussed last week how this was likely to occur.
The recent average weekly single family home sales is down to 56,000 newly pending single family home sales per week. Home sales are averaging almost 10% more than last year. October of 2023 was really weak for transaction volume. So yes it’s better now, but these are not a lot of home purchases. And like the new listings volume the trend is weakening now with the higher mortgage rates we’ve seen this fall. There are no signs of those mortgage rates improving either.
Overall for 2025 we are still forecasting slight growth overall in home sales. Probably just 5% more home sales next year than in 2024. In this chart view here, I’ve used a 4 week rolling average of home sales to smooth out the weekly noise, but you can see that sales are running just a bit ahead of last year the dark line at the right end of the chart is above the red line. And sales are declining for the season. This shows us that there’s not a ton of growth here, 52,000 new listings in a week and 53,000 sales. Not super optimistic.
The median price of those new sales started this week was $380,000 again. No change from last week. So new listings bounced up, inventory ticked up, the sales rate improved but the price stayed unchanged. Home prices by this measure are about 4% more than last year at this time.
In the chart here, you can see the median price of those newly pending home sales came in again at $380,000 this week. This year’s curve is the dark line at the top. I expected a little uptick in prices, so maybe this is a little signal of buyers reacting to higher mortgage rates. The median price of the newly pending home sales has been 3-5% more expensive than in 2023. You can see last year’s curve here in red.
The median price of all the homes on the market is $430,000 now. That’s down 1.1% from a week ago and is half a percent higher than a year ago. Sales prices for homes have been holding up better than asking prices, which I think is really interesting. This year lower price markets like Florida and Texas have gained inventory the most so that keeps a lid on asking price appreciation even when the price point people are buying inches up.
In the HousingWire forecast publication we shared how home prices normally climb about 5% each year. Home prices normally climb year over year because our economy grows, our population grows, and we tend to under-build. That’s why it’s so hard for home prices to fall even when sales are down as dramatically as they have been for nearly 3 years now. And this year is no exception. Home prices are coming in at about 5% above last year. Our forecast for 2025 is slightly weaker than 2024. We’re currently expecting 3.5% home price gains for the calendar year 2025.
This is a view of list price reductions I don’t think I’ve shared before. Normally we talk about the percent of homes on the market that have taken a price cut. That percentage has peaked for the year, and is now 38.8% of the homes on the market that have taken a price cut from the original list price. That portion barely moved this week. It’s been about 40% of the market for a couple months and is inching down, but isn’t giving us any new signal to watch.
So I thought I’d look up the magnitude of those price reductions. Rather than the percent of listings, let’s look at how much those listings need to cut price and see if that gives us any new information. This is cool, check it out.
Currently home sellers taking a price cut have dropped just over $15,000 from the original list price on average. If you think about the median priced home in the US, which is $430,000 now, that's a 3.5% price cut, which makes sense. If you’re a seller, that’s enough to move the needle for potential buyers.
But look at this yearly comparison. The weakest time recently for home prices, with demand plummeting, was the middle of 2022. That’s when the market shifted from pandemic craziness, to post-pandemic dead. In the middle of 2022, the percent of sellers who had to cut their prices was skyrocketing, and so was the dollar amount. See the light red line in the middle of the chart? That peaked at $24,000 price cuts which was over 5% of the list price at the time. I highlighted that section in gray here.
Or look at the far left of the chart to January of 2022 which was the opposite. That was when we were still in the heat of the pandemic frenzy. At the left end of the chart we can also see prices improving in January 2023 in the red line. After a rough Q4 2022, sellers felt better about their prospects and you can see it in the red line here.
In this chart we have the absolute level of price cuts to watch and the change in the amount. And right now fewer dollars are being cut and it’s declining for the season ahead of the last two years. I’m looking at the dark line here. This is another signal for home price stability as we look forward to 2025.
If you’re of the view that home prices are going to crash in 2025, I encourage you to look at signals like this. We can see current home price stability, and this metric can change direction quickly, so if price corrections are coming we can see it quickly.
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