Be ready for more inventory later in November
By Mike Simonsen
Inventory, new listings, sales, and prices all dipped this week. The autumn seasonal decline is upon us. The election took up a lot of peoples’ lives last week, and that obviously delayed some listing and sales activity, plus we’ve had spiking mortgage rates.
It’s actually not uncommon for housing activity to dip for the first week of November and rebound a bit in the following week. Given the confluence of trends right now, I do expect inventory and new listings to rebound again before the end of the month.
I’m now looking forward to 2025 when the data comes in each week. I have questions on the future of both sales volume and home prices. We’ll release the HousingWire 2025 Forecast paper in the next week or so where we’ll lay out our expectations, scenarios, and data to track for the real estate market in the coming year.
Let’s take a look at the data for the first full week of November 2024.
Inventory growing
Rising interest rates create rising inventory. Rising rates slows demand for homes and when demand slows, inventory grows. This has been true all year long, starting in the fourth quarter of 2023. At that time, mortgage rates rose from 6.5% to 8% and inventory spiked. Those high rates and rising inventory trends persisted for most of 2024 with only a small reprieve in September.
We’re also at the seasonal decline time for the housing market. It’s really hard for inventory to climb past Thanksgiving. We have two more weeks where I expect more inventory of unsold homes on the market.
But this week, unsold, available single-family home inventory around the country declined by nearly 2% to 722,000. Election week delayed a bunch of new listings, a few sales completed, and there are a fairly high number of withdrawn listings — plus, the total homes on the market declined. Any new listings delayed are now listed, and that’s why we’ll see an inventory rebound next week. I’m expecting 728,000 or so next week. People only delayed listing for a few days, and buying conditions are worse than they have been recently.
There are 28% more homes on the market than a year ago. Inventory was still growing each week in November of 2023. Remember that 2024 inventory had been as much as 40% above 2023, and now it’s 28%.
New listings declined
We counted 49,000 new listings of single-family homes this week, which was a big decline from recent trends. That’s probably a one-week dip due to the election. I expect a bit of a rebound next week back to maybe 55,000 or so.
But for this week, that new listings count was down 20% in a week. There were fewer new sellers this week than last year for the first time in a while. While it’s a notable week, it’s just one week and will bounce back. This is not suddenly a trend of dramatically fewer sellers. We have two full more weeks before Thanksgiving, and it’ll be in December before we see the big dips for the holidays.
We’re now looking into 2025, with expectations of continued growth in the seller volume. More sellers and greater inventory is a trend for 2025.
New pendings dip
The sales rates dipped along with the new supply rate this week. We’re looking at the newly pending contracts here. We counted 51,000 new sales started this week for single family homes plus another 10,000 condo sales contracts. That pace is down notably from a week earlier. And in fact we counted 2% fewer sales started this week than the same week last year.
The recent average is 58,000 single-family home sales started each week. That’s averaging 10% more than recent years in November. One poor showing breaks our 10-week streak of Year-over-year home sales growth, but it doesn’t yet reverse the trend.
On the other hand, with mortgage rates shooting up, maybe this autumn is shifting back into low sales mode. We’ve been disappointed with fake recoveries over the last three years. A reversal of our sales growth trend is not off the table. While I still expect a rebound in the new pendings count for this week of November 10, If we don’t get one, that will be a clear signal from homebuyers.
Even home prices dipped
Home prices dipped with the market activity in the election week also. The median price of single family homes that started contracts this week – those 49,000 newly pending sales – dropped a couple percent this week. Like inventory and sale volume, I expect a rebound in the price next week. By this measure ,even including the big dip this week, home prices are 4% above last year at this time at $380,000.
I expect prices to rebound next week with the bigger volume, but if that doesn’t happen, that will also be a signal that the this quarter’s steep jump in mortgage rates are taking their toll on homebuyer demand.
Price reductions—you guessed it—ticked down
While home prices ticked down this week, it’s probably due to the lower activity overall. One way to check that assumption is to look at the price reductions levels. If sellers are accelerating their price cuts, that would be a weakening signal. In fact, price reductions ticked down again this week.
We’re down to 38.8% of the homes on the market with price cuts. That’s fewer than last week and fewer than last year. We use price reductions are a leading indicator of future sales prices. While 38.8% is still more than normal which tells us what we already know and that is that demand for homes is still weak, the trend nationally is for fewer price reductions this fall. Recently as homes have sold or been withdrawn from the market the percent of listings that have taken price cuts from the original list price is ticking lower.
This tells us that the current expectations of buyers are sellers are lining up for continued price resiliency in 2025. There aren’t any signals in the data that show home prices falling dramatically.
As we look into 2025, it seems we’re lined up for another year where affordability is difficult. When you focus on affordability specifically, it’s hard to imagine how home prices can stay elevated. Homebuyers are stretched and as long as prices stay high, demand will be limited. There are some forecasters who use affordability as a guide for assuming home prices will fall in 2025 and 2026. At HousingWire, we’re about to publish our 2025 housing market forecast paper which covers all these perspectives.
A true data geek, Mike founded Altos Research in 2006 to bring previously unavailable insights on the US housing market to those who need it. The company now serves the largest Wall Street investment firms, banks, and tens of thousands of real estate professionals around the country. During the pandemic, Mike used Altos Research data to identify trends in the real estate market well before the headlines, and his work was recently featured in the New York Times, The Atlantic and other publications. Mike was also the 2020 president of the San Francisco Chapter of the Entrepreneurs’ Organization, a group in which he gets to lead and learn from hundreds of the most exciting entrepreneurs in the world.