Median home-sale prices increased 3.9% year over year to $403,348 during the four weeks ending November 26, the smallest increase since October 2023, according to a new report from Redfin (redfin.com). That’s down from a revised 4.9% annual gain in the prior month.
The housing market is losing steam due to still-high mortgage rates and a relatively low number of homes for sale. The average 30-year fixed mortgage rate is hovering around 7%, roughly double what it was a year ago, making it more expensive to buy a home. Pending home sales—a measure of signed contracts on existing homes—were down 37% year over year during the period. New listings of homes for sale fell 22%, marking the biggest decline since May 2020.
“The housing market has been remarkably resilient this year despite higher mortgage rates, but signs of a slowdown are accumulating,” said Redfin Economics Research Lead Chen Zhao. “The housing market typically peaks in the spring, and we expect next year’s peak season will be even quieter than this year’s due to the higher rates and ongoing economic uncertainty.”
Home prices are still rising in most parts of the country, but the pace of growth is slowing. In some markets, prices are even starting to decline. Austin, TX saw the largest year-over-year increase in median sale price, with an 11.9% gain. Milwaukee, WI experienced a notable increase as well, up 10.5%.
On the other end of the spectrum, prices fell in several metropolitan areas. San Francisco, CA (-7.7% YoY), Oakland, CA (-4.1% YoY), and San Jose, CA (-3.2% YoY) all saw declines. While these areas are traditionally high-value markets, the current economic climate and remote work trends are impacting demand and subsequently, prices.
The slowdown in the housing market is expected to continue into 2024. However, there are some factors that could help to support the market. The labor market remains strong, with unemployment at a historically low level. And, while mortgage rates are high, they are down slightly from their peak earlier this year.
Ultimately, the future of the housing market will depend on the direction of the economy and mortgage rates. If the economy weakens further or rates move higher, the housing market could experience a more significant downturn. But if the economy stabilizes and rates remain relatively stable, the market could continue to muddle along at its current pace. For prospective homebuyers and sellers, staying informed about market trends and consulting with a real estate professional remains crucial for navigating this dynamic environment.
