State of the Housing Market: Spring 2024

Spring housing market heating up?

Whether you’re looking to buy or sell a home, understanding the current housing market can help you get a good deal.

Home buying typically peaks in the spring, making it the busiest time of the year for prospective borrowers. However, 2024 could be different as house hunters and sellers alike continue waiting for a break in interest rates.

The Mortgage Reports’ State of the Housing Market is a quarterly feature that goes through the latest trends of real estate; including prices, sentiment, and inventory data.

At a glance...

• U.S. home price growth continues acceleration, per CoreLogic
• For-sale listings spike 23.5%, per Realtor.com
• Home completions step down in March, per Census Bureau and HUD
• Existing-property sales slow in March, per NAR
• New home sales rise annually - especially in Northeast, per Census Bureau and HUD
• Home buyers adjust to new market, per Fannie Mae
• Mortgage lenders increase credit access, per the MBA
• Home builder confidence holds, per NAHB

Home prices

Housing value appreciation returned to more normalized, pre-pandemic levels in 2023 and the beginning of 2024 following record-setting paces in 2021 and 2022.

U.S. single-family home prices rose 0.7% monthly and 5.5% annually in February 2024, according to CoreLogic’s Home Price Index. CoreLogic expects slow, gradual increases in home prices over the rest of the year.

“Spring home price gains are already off to a strong start despite continued mortgage rate volatility. That said, more inventory finally coming to market will likely translate to more options for buyers and fewer bidding wars, which typically keeps outsized price growth in check. Still, despite affordability challenges, homebuyer demand appears to favor already expensive, coastal markets with a limited availability of properties for sale,” said Selma Hepp, chief economist at CoreLogic.

At the state level, the biggest price inclines came in North Dakota with a 13.8% jump year-over-year, followed by 12.5% in New Jersey and 11.6% in Rhode Island.

CoreLogic forecasts national home price increases of 0.4% from February to March and a 3.1% bump by February 2025.

Housing inventory

The amount of available properties for sale at a given time greatly impacts real estate dynamics.

A bountiful for-sale market benefits buyers, while tight supply swings the pendulum toward sellers. The ongoing inventory shortage is perhaps the biggest detriment to the overall market, as demand overshadows supply.

The latest listing data

Active home listings surged 23.5% annually in March, according to Realtor.com’s Housing Market Trends report. While that still lags prepandemic levels, it marked the fifth straight month of yearly inventory growth.

“Sellers are starting to warm up to the current environment, wading into the market in increasing numbers despite market mortgage rates that are likely above their existing rate, if they have a mortgage. As a result, data shows surprisingly competitive pricing trends among sellers,” said Danielle Hale, chief economist of Realtor.com. “As seller optimism swells, we may see even further inventory gains later in the season that will likely create a more balanced environment for hopeful homebuyers.”

Florida metropolitan areas led the way in inventory gains among the 50 largest housing markets. Tampa, Orlando and Miami topped the list with annual gains in active listings of 58.3%, 53.3% and 48.2%, respectively. Denver and Jacksonville rounded out the top five, with increases of 48.1% and 38.6%.

On the flip side, the biggest annual declines in active listings came in Las Vegas with a 33.1% drop, followed by decreases of 7.7% in Chicago, 4.3% in New York, 4% in Rochester, N.Y., and 1.3% in Philadelphia.

The pipeline

To get an idea of what’s ahead, the Census Bureau and Department of Housing and Urban Development put together a joint Monthly New Residential Construction Report with three leading indicators of housing supply.

• Building permits hit a seasonally adjusted annual rate (SAAR) of 1.458 million in March. That figure fell 4.3% from February but rose 1.5% from March 2023.
• March housing starts reached a SAAR of 1.321 million. That dropped 14.7% monthly and 4.3% annually.
• December saw a SAAR of 1.469 million housing completions, decreasing 13.5% month-over-month and 3.9% year-over-year.

“While elevated mortgage rates continue to throw a wrench into housing markets and expectations of housing starts, home builders remain optimistic and will continue to add more single-family homes over the course of the year. In addition, with the continued imbalance between supply and demand, home prices are expected to keep rising. However, with expectations of Federal Reserve rate cuts fading out of forecasts, potential homebuyers will not gain any cost advantage by staying on the sidelines in 2024,” said Selma Hepp, chief economist at CoreLogic.

Home Sales

The total number of sold homes and the frequency at which they sell provide a picture for how real estate performs. It can also tell a story of where demand lies relative to supply and affordability.

In March, a SAAR 4.19 million existing homes sold, according to the National Association of Realtors (NAR). This drifted down 4.3% from February and 3.7% from March 2023.

Broken down by price tier, existing homes in the $250,000-$500,000 range accounted for the most transactions with 45% of sales. Among the country’s four major regions, the South led with a 45% share of sales, followed by 24% in the Midwest, 19% in the West and 12% in the Northeast.

“Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves,” said Lawrence Yun, NAR chief economist. “There are nearly six million more jobs now compared to pre-COVID highs, which suggests more aspiring home buyers exist in the market. More inventory is always welcomed in the current environment. Frankly, it’s a great time to list with ongoing multiple offers on mid-priced properties and, overall, home prices continuing to rise.”

Sales of new homes grew in March, according to the Census Bureau and HUD. New-home sales hit a SAAR of 693,000 for the month, jumping 8.8% from February and 8.3% from March 2023.

On a year-over-year basis, new-home sales increased 23.4% in the Midwest, 18.8% in the West, 4.5% in the South, while falling 13.2% in the Northeast.

“New home sales continue to be a bright spot in the housing industry,” said Selma Hepp, chief economist at CoreLogic. “Homebuilder confidence and buying incentives are helping to counterbalance high values and interest rates. However, compared to years in the past, new home sales still aren’t performing as well as necessary to help reduce the high demand for new homes in the near term.”

How are home buyers feeling?

The general consensus among house hunters can shape market competition.

More demand — especially when for-sale inventory is low — can create frenzied bidding wars and accelerate home price growth. When home buyer conditions aren’t as opportune, borrowers may be able to get a relatively good deal on a property.

Through a consumer survey, Fannie Mae’s Home Purchase Sentiment Index (HPSI) evaluates the overall view and outlook of the housing market through six components: Good time to buy, good time to sell, home price expectations, mortgage rate expectations, job loss concern, and household income. The index launched in 2011 and runs on a scale of zero to 100. It reached a high of 93.8 in August 2019 and a low of 56.7 in October 2022.

In March, the HPSI measured 71.9, down from 72.8 month-over-month but up from 61.3 year-over-year. The share of respondents who said it was a ‘good time to buy’ rose a net four percentage points from February and two percentage points from March 2023. Meanwhile, ‘good time to sell’ rose two percentage points from monthly and 14 points annually.

“We’re seeing signs that consumers may be adjusting their expectations for the housing market to better accommodate the higher mortgage rate and home price environment,” said Doug Duncan, Fannie Mae chief economist. “We expect to see a gradual increase in home listings and sales transactions in the coming year. We believe this will be driven not only by those coming off the sidelines due to a rate-related recalibration, but also by households who may need to need to move for other life reasons.”

How are lenders feeling?

Mortgage lenders constantly adjust their underwriting standards. Their willingness to approve and take on a home loan depends on both the borrower’s financial profile and the overall economic conditions at that point in time.

When the economy runs hot, lender leniency tends to go up because those mortgages come with less risk. The opposite holds true during leaner times or recessions due to heightened uncertainty.

The Mortgage Bankers Association (MBA) measures this phenomenon with its Mortgage Credit Availability Index (MCAI). The MCAI has a baseline score of 100. Any score above that means lenders are more likely to extend credit while anything below indicates tighter standards.

The MCAI reached 93.9 in March, up from 92.9 in February and down from 100.5 the year before.

“Credit availability increased in March, driven by growth in conventional credit. There were increased offerings of cash-out refinance loan programs across fixed rate and ARM loans, as well as for all occupancy types,” Joel Kan, MBA’s deputy chief economist. “Although credit supply increased for the third consecutive month, it remains low at nearly 7 percent below a year ago and still close to 2012 lows.”

How are home builders feeling?

Home builder sentiment changes alongside consumer demand, market conditions, shifting costs and supply chain fluidity.

The National Association of Home Builders (NAHB) and Wells Fargo measure this sentiment on a 0-100 scale in their monthly Housing Market Index (HMI) survey. The survey is broken into three components: current home sales, home sales over the next six months and traffic of prospective buyers.

The tête-à-tête between mortgage rates and inflation held builder confidence in check at 51 in April. However, it remains above April 2023’s score of 45.

“With many frustrated buyers back on the fence waiting for interest rates to fall, policymakers can help ease affordability challenges by reducing inefficient regulatory rules that raise housing costs and limit supply,” said NAHB Chairman Carl Harris.

The bottom line

Whether you’re a buyer or seller, trying to understand the housing market at any given time can be difficult.

Many real estate experts will tell you it’s never a bad time to buy a house as long as you can comfortably afford it. But comprehending the latest happenings in the marketplace can give you a leg up.

If you’re ready to become a homeowner or sell your current property, reach out to a local mortgage professional today.