The real estate market is dynamic and influenced by many factors, including economic conditions, interest rates, and consumer confidence. As we approach the end of 2024, understanding whether real estate sales are rising or declining requires carefully examining recent data and trends.

Current State of Real Estate Sales

Recent reports indicate a notable decline in real estate sales across the United States. In August 2024, home sales dropped to their lowest level since October 2023, largely attributed to persistently high mortgage rates and record home prices. Specifically, sales of previously owned homes decreased by 2.5%, translating to an annual rate of 3.86 million. Concurrently, median home prices surged by 3.1% year-over-year, reaching a record high of $416,700 for August.

However, a turnaround was observed in September 2024, where pending home sales saw a significant rebound, with contract signings increasing by 7.4% from the previous month. This resurgence was largely driven by a dip in mortgage rates, with the 30-year mortgage rate falling to 6.08% at the end of September. This decrease sparked renewed interest from buyers and prompted a wave of refinancing among existing homeowners, pushing the National Association of Realtors (NAR) index to its highest level since March.

Factors Influencing Real Estate Sales

Several critical factors currently shape the trends in real estate sales:

• Mortgage Rates: Elevated mortgage rates have deterred many potential buyers. Although there was a temporary decline in rates during September, they have since rebounded to a three-month high, negatively affecting affordability and overall buyer sentiment.
• Home Prices: The ongoing rise in home prices challenges affordability for many buyers. While some regions experienced minor price dips, the overall trend remains upward, contributing to the slowdown in sales.
• Inventory Levels: The number of homes available for purchase has substantially increased compared to last year, rising by 34.0% in September 2024. This marks the 11th consecutive month of inventory growth, offering buyers more options and reflecting a market where homes take longer to sell.
• Economic Conditions: Broader economic factors, such as inflation and employment rates, significantly impact consumer confidence and purchasing power, affecting real estate sales.

Regional Variations in Real Estate Salesal estate trends are not uniform and can vary significantly by region:

• San Francisco: Despite slower sales across most of San Francisco’s housing market compared to pre-pandemic levels, the Sunset District remains resilient. Data from Redfin indicates that homes in the Sunset’s 94122 and 94116 ZIP codes sold in a median of two weeks between June and August 2024, maintaining a pace similar to 2019.
• New York City: Areas like Madison Avenue are experiencing a post-pandemic revival spurred by new luxury retailers and residential projects. Developments such as the Surrey and other residential units contribute to the area’s vibrant real estate scene.

Future Outlook for Real Estate Sales

The outlook for real estate sales appears mixed.

• Predictions for 2024: Redfin forecasts a potential decline in home prices during the second and third quarters of 2024, marking an end to a decade-long trend of increasing prices. They also predict that new listings, home sales, mortgage rates, and rents will rise, suggesting a shift towards a buyer’s market.
• Long-Term Trends: According to U.S. News Real Estate, moderate growth is expected in the housing market over the next five years, with gradual increases in home prices and sales as economic conditions stabilize.

Conclusion

As of November 2024, the real estate market navigates fluctuations influenced by mortgage rates, home prices, and inventory levels. While the earlier part of the year saw significant sales declines, recent data indicates a possible rebound, particularly with the increase in pending home sales in September. Nevertheless, the sustainability of this trend remains uncertain amid the volatility in mortgage rates and broader economic conditions. Prospective buyers and sellers are encouraged to stay informed about ongoing market developments to make educated decisions.