Norada Real Estate Investments

Existing Home Sales Predicted to Remain at 30-year Low in 2025

by

If you've been following the housing market, you know it’s been a bit of a rollercoaster lately. It feels like we’re all holding our breath, waiting for things to change, especially if you're hoping to buy or sell a house soon. I’ve been watching these trends closely, and honestly, the latest news is a bit sobering. According to Fannie Mae's Economic and Strategic Research Group, existing home sales are expected to stay near their 30-year lows throughout 2025. Yep, you read that right.

Now, before you panic, let’s break down what this actually means, why it’s happening, and what you can expect if you're navigating this tricky market. I'll also throw in my two cents based on what I'm seeing out there.

Existing Home Sales Predicted to Remain at 30-year Low in 2025

What Does “Near 30-Year Lows” Really Mean?

First off, let's put this into perspective. Thirty years ago, in the early to mid-1990s, the housing market was a completely different beast. Mortgage rates were higher, and home prices were considerably lower than they are today. When we say “near 30-year lows,” we’re talking about a significant slowdown in the number of existing homes being sold compared to the last three decades. Basically, fewer people are selling their homes, and fewer people are buying them.

This means less movement in the market overall. Fewer opportunities for sellers to make a quick move and fewer options for buyers looking for their dream home. It paints a picture of a housing market that's, well, stuck.

Why Are We Stuck?

So, what's causing this standstill? Well, there are a few key factors at play, and they’re all interconnected like a messy ball of yarn.

  • The “Lock-In” Effect: This is a big one. A lot of current homeowners have low mortgage rates – think 3% or even lower – from when the rates were at rock bottom. The thought of trading that in for a 6% or higher interest rate is a tough pill to swallow. This keeps people put. It’s like they are “locked-in” to their current homes, and they’re not eager to give up that low rate. This results in fewer homes hitting the market.
  • High Mortgage Rates: Even though rates are predicted to decline modestly, the fact that they are expected to stay above 6% is a major hurdle. The cost of borrowing money is still high, which means higher monthly payments for homebuyers. This immediately pushes many buyers out of the market altogether, especially first-time buyers. In my experience, I've seen many families postpone their home buying plans because of this.
  • Affordability Issues: It's not just the mortgage rates. Even if rates dipped a bit, home prices are still elevated in many areas. This combination of higher prices and high interest rates makes buying a home incredibly challenging. As Fannie Mae also notes, supply is still below pre-pandemic levels. It's a perfect storm of factors making it hard for many folks to get their foot in the door of homeownership.

Fannie Mae's 2025 Housing Market Predictions in Detail

Let's dig a little deeper into what Fannie Mae is predicting. They've laid out a few key trends to watch in 2025. Here’s a breakdown of their predictions and my take on each:

  • Modest Decline in Mortgage Rates: They predict that mortgage rates will decrease slightly, but they will stay above 6%, with periods of volatility. This volatility is key to watch. Even with average higher rates, temporary drops might offer brief windows for buyers to jump in. As a real estate watcher, I think it’s crucial for those in the market to stay vigilant and be ready to move when those dips occur.
  • Existing Home Sales Remain Near 30-Year Lows: This is the big one we’ve been talking about. The “lock-in” effect and affordability issues, they are all converging to keep activity subdued. We’re not expecting some massive wave of homes hitting the market anytime soon.
  • New Home Sales as a Bright Spot: Here's a bit of good news. New home sales are expected to be stronger. Builders are actively targeting first-time homebuyers with new offerings. If you are open to new construction, that's something you can explore. But keep in mind this is limited to areas where building is possible and affordable.
  • Decelerating National Home Price Growth: Fannie Mae predicts that national home price growth will slow down. While this doesn't mean a massive price drop, it could offer a bit of relief to buyers. I think this slow down is more of a return to normalcy and should be welcomed. It gives a bit of breathing room to the market.
  • Multifamily Housing in a Holding Pattern: The multifamily housing sector, like apartments and rentals, is expected to remain stable. This is an area I think needs more attention because with fewer options to buy, rental becomes the only choice for many.

A Closer Look at Regional Differences

It's critical to understand that the housing market is not uniform. What’s happening in one area might be totally different in another. Fannie Mae points out some big regional differences:

  • The Sun Belt: This is where construction has been active, and builders are focusing on first-time homebuyers. I've noticed more activity here with more development being built that’s creating an option to purchase new construction. You might see a little more movement in this market compared to other areas.
  • The Northeast: This area is expected to remain constrained. Supply is already low and there is less room for new construction. This means prices might be stickier and competition for existing homes will likely remain high. This is a common experience for those of us who've been watching the northeast closely.

A Glimmer of Hope: Wage Growth

One encouraging thing I am seeing is Fannie Mae's mention that nominal wage growth is expected to surpass home price growth in 2025. This hasn't happened in over a decade. This means that, slowly but surely, people might see their income finally catch up to the price of housing. This could offer some much-needed relief to potential homebuyers, but it won't be an overnight fix.

What This Means For You

So, how should you interpret this data? Here's my take on it:

If you're a potential buyer:

  • Be Patient and Vigilant: Don’t expect a drastic market change overnight. Keep an eye out for those temporary dips in mortgage rates and be prepared to act fast.
  • Consider New Construction: If your area has new construction happening, explore these options. Builders are trying to lure in first time buyers with incentives, so you could find a good deal.
  • Be Flexible on Location: If you can be flexible with your location, you might find more opportunities in areas that have more supply.
  • Budget Carefully: It's even more critical than ever to budget realistically and understand your long-term financial obligations.

If you're a potential seller:

  • Realize It's a Slower Market: Don’t expect your home to fly off the shelves immediately. You may need to be more patient.
  • Price Competitively: With a constrained market, pricing accurately is key. Don't overprice your home, or it may sit for months.
  • Consider Timing: If you can, timing your sale to coincide with periods of lower mortgage rates could help attract buyers.

For everyone else:

  • Stay Informed: It’s crucial to stay updated on the latest market trends, especially if you’re thinking about a move in the near future. Things can change quickly, and staying informed can help you make better decisions.
  • Prepare: Whether you’re a buyer or a seller, preparation is vital. Look at all your financial details and get pre-approved if you are thinking of purchasing.

My Final Thoughts

As someone who follows the housing market closely, I can tell you that these are challenging times. But, knowledge is power. Knowing what to expect can help you navigate these challenges more effectively. The housing market is complex, and it's important to look at data, consider your own local situations, and adjust your expectations. I believe that the market will eventually turn around, but it may be a while before we see a big shift.

Here’s a summary of the data we discussed:

Prediction Detail My Take
Mortgage Rates Modest decline, but above 6%, with volatility Watch for temporary dips for opportunities
Existing Home Sales Near 30-year lows Don't expect a rapid market rebound
New Home Sales Stronger than existing homes Explore new construction if possible
National Home Price Growth Decelerating A welcome return to normal
Multifamily Housing Remains in a holding pattern More attention is needed to alleviate stress for those who can't buy
Regional Differences Sun Belt stronger, Northeast constrained Understand your local market conditions
Wage Growth Expected to outpace home price growth A positive sign for potential buyers, but gradual relief

The data from Fannie Mae paints a picture of a market that's sluggish and will likely remain so through 2025. The combination of high mortgage rates, affordability issues, and the lock-in effect are all contributing to a constrained housing market. While things may change slowly over time, it's clear that we're in for more of the same for now. I hope this in-depth view of the market will help you in making a decision with your home buying and selling needs.

Partner with Norada, Your Trusted Source for Turnkey Investment Properties

Discover high-quality, ready-to-rent properties designed to deliver consistent returns. Contact us today to expand your real estate portfolio with confidence.

Reach out to our investment counselors:

(949) 218-6668 | (800) 611-3060

Contact Us Today

 

Housing Market 2024: New Home Sales Fall in August, But Remain Strong

by

In August 2024, new home sales faced a significant decline, down 4.7% compared to the previous month, with a seasonally adjusted annual rate of 716,000 homes sold. This figure follows a notable increase of 10.6% in July, demonstrating the volatility of the housing market. Understanding these shifts is essential for anyone interested in real estate, from potential homebuyers to investors and industry analysts.

New Home Sales August 2024: A Closer Look at the Market Trends

Key Takeaways

  • Sales Decline: August 2024 new home sales fell 4.7% to 716,000 from 751,000 in July.
  • Annual Increase: Despite the monthly drop, there was a 9.8% increase from the previous year.
  • Price Trends: The median sale price dropped 4.6% year-over-year to $420,600.
  • Inventory Levels: Unsold listings increased by 1.7% month-over-month, totaling 467,000 homes.
  • Regional Variations: New home sales varied significantly across regions, with decreases in the Northeast and West but growth in the South.

Understanding the August Shift in New Home Sales

After a robust performance in July, where new home sales surged, the drop in August was somewhat unexpected. According to the data published by the U.S. Census Bureau and the Department of Housing and Urban Development (HUD), the rate of new home sales was adjusted downward from 751,000 to 716,000. This decline reflects a complex interplay of market factors, including consumer confidence and economic conditions.

The decrease in sales can partly be attributed to shifting dynamics in mortgage rates. For many buyers, even a small increase in rates can seriously impact affordability and purchasing decisions. Economists have noted that while lower mortgage rates have stimulated demand, the ongoing uncertainty around economic conditions often leaves potential buyers hesitant.

Factors Influencing New Home Sales

  1. Mortgage Rate Fluctuations: In the recent months leading up to August 2024, a reduction in mortgage rates has been reported. Lower rates generally encourage buyers to enter the market, but when combined with increasing prices and tight inventory, they can also lead to mixed results. Experts predict that as mortgage rates stabilize, we may see a resulting uptick in buyer traffic, but there’s caution that these conditions might not be a complete remedy for the housing market challenges.
  2. Shifting Buyer Preferences: The economic environment has also affected what buyers are looking for. A preference for affordability has seen many potential homeowners gravitate towards new builds with attractive pricing. The recent report indicates that the median sale price for new homes dropped 4.6% year-over-year, now sitting at $420,600. This can be an enticing factor for a market that has been heavily criticized for its skyrocketing prices over the past few years.
  3. Inventory Levels: Another crucial aspect of the new home sales landscape is inventory. In August, the total supply of unsold new homes rose by 1.7% month-over-month and 9.1% annually, reaching 467,000. This represents approximately 7.8 months of supply at the current sales pace, signaling a shift towards a more balanced market. With more options available, buyers may feel less pressure and take their time in making purchasing decisions.

Regional Analysis of New Home Sales

The decline in new home sales was not uniform across the nation. Let’s look at the regional breakdown for August 2024:

  • Northeast: New home sales tumbled 27.3% month-over-month.
  • Midwest: The region experienced a modest drop of 5.8%.
  • South: Interestingly, this area saw a 2.7% increase in new home sales, contrasting the trends in the other regions.
  • West: This region faced the largest decline, dropping 17.8% in sales.

Year-over-year comparisons paint an even more interesting picture. The South and Midwest saw sales increase by 18% and 26.6%, respectively, while the Northeast and West experienced sales declines of 33.3% and 6.7%. These figures hint at the varying regional market conditions and their inherent challenges.

Future Outlook for New Home Sales

Despite the recent downturn, many analysts remain cautiously optimistic about the new home market. The long-term housing shortage, combined with lower mortgage rates and builders' willingness to offer incentives, could buoy demand for new homes. While the current figures may seem discouraging, several factors lend credit to the notion that the new home market could outperform existing homes in the near future. Builders are not constrained by the same high-interest lock-in that existing homeowners face, allowing them to remain agile and competitive.

Moreover, as the Federal Reserve considers possible interest rate cuts, existing inventory levels continue to rise, giving buyers greater choices. However, with increased inventory comes the potential for demand dilution among properties, which could impact new home sales in the long run. It remains to be seen how these economic conditions will evolve and what this means for the housing market moving forward.

Conclusion

Overall, the landscape of new home sales in August 2024 reflects a range of market conditions. The combination of declining sales, variable pricing, and inventory expansion indicates both challenges and opportunities in the realm of home buying. For potential buyers, real estate investors, and industry players alike, understanding these dynamics is essential to navigating the complexities of the housing market today.

Historical Home Sales Data in the United States

by

Historical Home Sales

The market for existing home sales in the United States has witnessed significant fluctuations and trends over the years. Understanding the historical context and recent developments is crucial for both buyers and sellers. Let's delve into the data and trends regarding existing home sales in the U.S.

Historical Averages

From 1968 to 2023, existing home sales in the United States have averaged approximately 4,065.91 thousand transactions annually. This long-term average reflects the overall stability of the real estate market in the country.

Highs and Lows

The highest number of existing home sales in the U.S. was recorded at 7,250 thousand transactions in September 2005. This peak was associated with the housing boom that preceded the 2008 financial crisis. On the other end of the spectrum, the lowest number of sales occurred in March 1970, with only 1,370 thousand transactions.

Recent Trends

In 2022, the U.S. saw 5 million housing transactions completed, marking a decrease from the previous year when 6.12 million transactions were recorded in 2021. This decline suggests a cooling down of the real estate market.

In 2023, the National Association of Realtors (NAR) reported that 4,090,000 existing homes were sold in the United States, which is an 18.7% decrease from 2022. This was the lowest number of home sales since 1995 and the largest annual decline since 2007.

Home Sales Data: July 31, 2022 – July 31, 2024

Here is the tabular data on home sales between July 31, 2022, and July 31, 2024. It shows the corresponding home sales figures that tell a story of market fluctuations and resilience.

Date Value
July 31, 2024 3.95M
June 30, 2024 3.90M
May 31, 2024 4.11M
April 30, 2024 4.14M
March 31, 2024 4.22M
February 29, 2024 4.38M
January 31, 2024 4.00M
December 31, 2023 3.88M
November 30, 2023 3.91M
October 31, 2023 3.85M
September 30, 2023 3.98M
August 31, 2023 4.03M
July 31, 2023 4.05M
June 30, 2023 4.11M
May 31, 2023 4.23M
April 30, 2023 4.22M
March 31, 2023 4.35M
February 28, 2023 4.53M
January 31, 2023 4.07M
December 31, 2022 4.03M
November 30, 2022 4.12M
October 31, 2022 4.44M
September 30, 2022 4.68M
August 31, 2022 4.77M
July 31, 2022 4.88M

U.S. Existing Home Sales 2005-2023: An Overview

According to the Statista Research Department report published on July 12, 2023, the trajectory of existing home sales in the United States from 2005 to 2023 has been a rollercoaster ride, with fluctuations driven by a multitude of factors. Here is an in-depth analysis of this journey, shedding light on recent trends and addressing the burning questions surrounding the real estate market.

A Shift in Home Sales: 2021 to 2022

In 2022, the U.S. witnessed a significant change in the landscape of home sales. After a surge in the previous year, the number of home sales declined, marking a shift from the trend observed since 2020. A total of five million housing transactions were completed in 2022, down from the robust 6.12 million recorded in 2021. This change brought the market closer to pre-pandemic levels, raising questions about the factors behind this shift.

Factors Behind the Decline

The housing boom experienced during the coronavirus pandemic underscored the enduring allure of homeownership as part of the American dream. However, sentiment among potential buyers declined notably in the second half of 2022. Across all generations, Americans increasingly felt that the timing was not right to buy a home.

Several factors converged to make homeownership less accessible to the average buyer. One significant challenge was the soaring house prices, which made owning a home financially out of reach for many. A survey conducted among both owners and renters revealed that the two primary barriers to home purchases in the third quarter of the year were high home prices and unfavorable economic conditions.

Aspiring homeowners faced the daunting task of saving up a substantial deposit, maintaining a good credit score, and securing a steady and sufficient income to qualify for a mortgage. Additionally, the real estate landscape was significantly impacted by the most aggressive increase in mortgage rates in history, driving up the total cost of homeownership. Shockingly, only 15 percent of U.S. renters found themselves in a position to afford becoming homeowners, and in highly competitive housing markets like Los Angeles, CA, and Urban Honolulu, HI, this number plummeted to below five percent.

The Outlook for Home Prices

The median sales price of existing homes reached 391,500 U.S. dollars in the third quarter of 2022. While it was forecasted to experience a slight decline until the fourth quarter of 2023, the actual trajectory of home prices demonstrated a degree of volatility. The S&P/Case Shiller U.S. National Home Price Index revealed a seven-month decline between June 2022 and January 2023, followed by a reversal in the trend in subsequent months.

Despite mild fluctuations, many metros anticipate continued growth in home prices, albeit at a slower pace. The chronic shortage of newly built homes to meet the high demand has resulted in a market that remains undersupplied. This scenario makes a dramatic decline in house prices unlikely, indicating that the real estate market will continue to be characterized by resilience and adaptability.

In conclusion, the U.S. existing home sales market from 2005 to 2023 reflects the ever-changing dynamics of the real estate sector, influenced by economic, demographic, and financial factors. While recent years have seen fluctuations, the enduring aspiration of homeownership and the complexities of affordability continue to shape the market's landscape.

Historical Housing Units: A Tale of Growth and Trends

According to the Statista Research Department report published on July 12, 2022, the number of housing units has consistently risen year by year, with historical home sales reflecting the ever-changing landscape of homeownership. Let's explore the journey of housing units in the U.S. from 1975 to 2021.

A Growing Inventory

As of 2021, the United States boasted approximately 142 million housing units, representing a continuous upward trajectory. This marked an increase of over one million units compared to the previous year when the total housing stock stood at 140.8 million units.

This steady increase in the number of housing units speaks to the nation's commitment to providing a place to call home for its citizens, a fundamental component of the American Dream.

Shifting Housing Trends

While the growth in housing units has remained consistent, notable shifts have occurred in the type of housing occupancy—either owner-occupied or renter-occupied. In the years following the financial crisis, the number of owner-occupied units experienced a stall, while the number of renter-occupied units was on the rise. This trend suggested a shift away from traditional homeownership.

However, in recent years, this trend has reversed course, underscoring the enduring importance of homeownership as an integral part of the American Dream. The desire to own a piece of the American dream remains strong.

Homeownership and Housing Transactions

The dynamics of housing in the U.S. have been further influenced by housing transactions. In 2020, the number of home sales experienced a notable spike, surpassing levels last seen in 2007. Despite the economic uncertainty brought about by the coronavirus (COVID-19) pandemic, many Americans have become more determined to realize their homeownership plans than ever before.

These trends in housing transactions reaffirm the resilience of the U.S. housing market. Even in challenging times, the aspiration to own a home remains a powerful driving force, a testament to the enduring legacy of historical home sales in the United States.

Historical Data of New Housing Units Sold in the U.S.

The story of new housing units sold in the United States from 1995 to 2022 is one of resilience, transformation, and evolving consumer preferences. Here are the dramatic shifts in the market, from the fallout of the financial crisis to the surge in demand during the pandemic.

The Financial Crisis and Recovery

The real estate market in the United States faced a significant upheaval during the financial crisis. The number of new houses sold plummeted from a peak of approximately 1.3 million in 2005 to a mere 306 thousand in 2011, marking a staggering 76 percent decrease. This tumultuous period underscored the vulnerabilities in the housing sector (Published by Statista Research Department, Feb 10, 2023).

While the economy has largely recovered since the crisis, consumers remained cautious about venturing into the housing market. However, a resurgence was on the horizon.

The Surging Demand in 2020 and 2021

The housing market experienced a remarkable turnaround in 2020 and 2021, as demand for housing surged. The number of new house sales volumes spiked to 822,000 and 770,000 respectively, reflecting a renewed vigor among prospective homebuyers.

But what fueled this resurgence in demand?

Factors Driving Demand

The surge in demand for housing coincided with the COVID-19 pandemic, which had profound effects on the housing market. Many Americans found themselves more interested in buying a home due to the pandemic. The quest for comfortable and secure living spaces became a priority, prompting a surge in demand for new houses.

Preferred Home Types and Locations

When it comes to the types of homes Americans are buying, detached single-family houses continue to dominate the market. In fact, approximately 88 percent of older Millennials who bought a home in 2020 reported purchasing a detached single-family house. This preference for standalone homes transcends age groups and remains a prevailing trend.

Furthermore, the most popular location to purchase a home remains in the suburbs or in a subdivision. This choice reflects the enduring appeal of suburban living and the desire for well-planned communities.

Understanding the Surge in U.S. New Home Prices: A Deep Dive

The landscape of new home prices in the United States has experienced remarkable shifts and fluctuations over the years, with historical home sales data reflecting the complex dynamics of the real estate market. Let's explore the drivers behind the dramatic increase in average sales prices of new homes from 1965 to 2022.

From Plateau to Surge: 2017 to 2022

According to the Statista Research Department report published on June 28, 2023, between 2017 and 2019, new house prices in the United States appeared to plateau, showing relatively stable trends. However, the real estate market underwent a dramatic transformation in 2021 and 2022. The average sales price of a new home stood at 391,900 U.S. dollars in 2020 soared to 540,000 U.S. dollars by 2022.

The question that naturally arises is: What fueled this unprecedented surge in house prices?

The Role of Borrowing Costs

One of the major driving forces behind the dramatic increase in house prices was the historically low cost of borrowing. In 2020 and 2021, mortgage rates plummeted to historic lows. Homebuyers were presented with the opportunity to secure loans at 15-year mortgage rates of less than 2.5 percent. This extraordinary affordability attracted a surge in demand for new homes, driving up prices as buyers rushed to capitalize on favorable borrowing conditions.

The increased demand reached its zenith in 2021 when the number of housing transactions peaked at nearly seven million, signaling the fervor in the market and the impact of accessible mortgage rates.

The Influence of the Pandemic

As the world grappled with the coronavirus (COVID-19) pandemic, it had a complex influence on Americans' homeownership plans. Surprisingly, the pandemic positively influenced the homeownership aspirations of many Americans in 2020. According to a survey conducted among U.S. adults, 28 percent of Millennials expressed increased interest in buying a home due to the pandemic, compared to 13 percent who were less interested.

This shift in sentiment highlighted the changing priorities and the role of housing as a safe haven during uncertain times.

Historical Data of U.S. Housing Units for Sale: 1975 to 2022

The availability of housing units for sale in the United States has followed a remarkable trend over the past four decades. This section delves into the data and insights regarding the number of housing units available for sale from 1975 to 2022, shedding light on the prolonged decline in housing inventory.

Decades of Data: A Prolonged Decline

Since its peak in 2010, the number of housing units available for sale in the United States has been on a steady and persistent decline. This uninterrupted decrease in housing inventory continued for 12 consecutive years, reflecting a significant shift in the real estate market, according to the report by Statista Research Department, Apr 17, 2023.

The question that arises is: What contributed to this prolonged decline?

Factors Behind the Decline

The decline in available housing units for sale can be attributed to various factors, including changing demographics, economic conditions, and evolving homeowner preferences. The aftermath of the 2008 financial crisis led to a surge in foreclosures, increasing the housing supply temporarily. However, in the subsequent years, a combination of factors such as population growth, increased demand, and limited new construction contributed to the decline in available units.

This phenomenon has had implications for both buyers and sellers in the real estate market. A shrinking housing inventory can lead to increased competition among buyers, driving up prices and making it challenging for potential homeowners to find suitable properties.

The Situation in 2022

In 2022, the data revealed that there were approximately 713,000 vacant housing units for sale in the United States. This number represented the culmination of the prolonged decline in housing inventory, with potential buyers facing a more competitive and constrained market than in previous years.

The challenge for both buyers and sellers in this environment is to navigate the evolving landscape of real estate, adapt to changing market conditions, and make informed decisions.

Historical Homeownership Rate in the U.S. 1990-2022

The concept of homeownership has long been intertwined with the American Dream. The journey of homeownership in the United States, from the highs of 2004 to the lows of the recession, and the subsequent resurgence, paints a dynamic picture of aspiration and resilience in the housing market. Let us delve into the data and trends surrounding the homeownership rate in the U.S. from 1990 to 2022.

The Rise and Fall

In 2022, the homeownership rate in the United States experienced a noteworthy uptick, reaching the highest figure since 2011. Approximately 65.9 percent of households were occupied by owners, reflecting a renewed interest in homeownership as published by Statista Research Department, Aug 30, 2023.

However, the journey to this resurgence was not without its challenges. The homeownership rate had its peak in 2004 before the onslaught of the 2007-2009 recession, which decimated the housing market. In the wake of the recession, the rate continued to fall until 2016, marking a significant decline.

But what factors influenced this rollercoaster ride?

Homeownership Since the Recession

The period leading up to the recession and its aftermath saw a decline in the homeownership rate. However, interestingly, the proportion of Americans who still perceived homeownership as part of their personal American Dream remained relatively stable. This suggests that the financial hardships brought on by the recession were key drivers of the decline in homeownership, rather than a fundamental shift in the importance of homeownership itself.

This resilience in the belief in homeownership underscores its enduring significance in the hearts and minds of Americans, even in the face of economic challenges.

The Future of Homeownership

Looking ahead, homeownership trends continue to evolve across different generations. Homeownership among Americans over 65 years old is on the decline, while a significant number of Millennials plan to buy a home in the near future. This suggests that homeownership will remain a vital component of the American Dream in the years to come.

As Millennials are forecasted to head most households over the next two decades, the importance of homeownership is expected to persist. The aspiration to own a piece of the American Dream remains a driving force in the housing market's resilience and adaptability.

Home Sales Trends in the Past

The history of home sales in the United States is a fascinating journey through the economic and social development of the nation. From the early colonial period to the present day, the real estate market has experienced significant changes, influenced by various factors. In this article, we will explore the historical home sales in the U.S. and the key milestones that have shaped the industry.

Colonial Beginnings

Home sales in the United States can trace their roots back to the colonial era when property ownership was primarily limited to the elite and land grants from European monarchs. The concept of residential real estate as we know it today began to emerge in the late 18th century as the new nation expanded westward.

The Land Act of 1796

The Land Act of 1796 marked a significant turning point in American real estate history. It made it possible for individuals to purchase federal land at an affordable price, leading to a boom in land sales and the spread of settlements across the country.

19th Century: The Rise of Urbanization

The 19th century witnessed the rapid growth of cities and the emergence of a more organized real estate market. This era saw the development of the first real estate agencies and the establishment of property deeds and titles.

The Homestead Act of 1862

The Homestead Act of 1862 was a historic piece of legislation that granted 160 acres of public land to settlers who agreed to improve the land by building a dwelling and cultivating crops. This act played a pivotal role in encouraging westward expansion and home ownership.

The Roaring Twenties and the Great Depression

The 1920s were marked by a booming real estate market, with Americans increasingly investing in homes and urban properties. However, this era was followed by the devastating Great Depression, which led to a sharp decline in home sales and property values.

The Federal Housing Administration (FHA)

The establishment of the Federal Housing Administration (FHA) in 1934 was a critical step in revitalizing the real estate market. It introduced mortgage insurance and standardized lending practices, making it easier for Americans to obtain home loans.

Post-World War II and Suburbanization

After World War II, the United States experienced a housing boom driven by returning veterans and a growing middle class. The concept of suburban living became increasingly popular, leading to the construction of mass-produced homes and the expansion of suburbs.

The Housing and Urban Development (HUD)

The creation of the Housing and Urban Development (HUD) department in 1965 further transformed the real estate landscape. It aimed to provide affordable housing options and combat discrimination in housing practices.

The 21st Century and Modern Trends

In the 21st century, technological advancements, changing demographics, and economic fluctuations have continued to shape the U.S. real estate market. The housing bubble of the mid-2000s and the subsequent market crash highlighted the importance of responsible lending and regulation.

The Impact of Online Real Estate Platforms

The rise of online real estate platforms, such as Zillow and Redfin, has revolutionized the way Americans buy and sell homes. These platforms provide easy access to property listings and market data, empowering consumers and agents alike.

Sources/References: 

  • https://www.statista.com/statistics/226144/us-existing-home-sales/
  • https://www.statista.com/statistics/240267/number-of-housing-units-in-the-united-states/
  • https://www.statista.com/statistics/184902/homeownership-rate-in-the-us-since-2003/
  • https://www.statista.com/statistics/219963/number-of-us-house-sales/
  • https://ycharts.com/indicators/us_existing_home_sales

New Home Sales Fell in April: Will they Rebound? Predictions

by

New home sales are slumping due to rising costs. Will they rebound in 2024? Let's find out. The dream of homeownership has recently taken a hit as the U.S. housing market navigates a period of shifting dynamics. Sales of newly built homes dipped 4.7% in April compared to March, according to data released by the U.S. Census. This decline is even more pronounced on a year-over-year basis, with sales falling 7.7% from April 2023.

The culprit behind this slowdown is clear: rising interest rates. The monthly sales figures track contracts signed during the month, reflecting buyer decisions based on prevailing interest rates. In March, the average rate for a 30-year fixed mortgage hovered around 6%. By April, that rate had jumped to a staggering 7.5%, significantly impacting affordability.

Beyond rising interest rates, potential homebuyers face another hurdle: an increase in home prices. The median price of a new home in April reached $433,500, a 4% increase over April 2023. This can partly be explained by the type of homes currently selling – often on the higher end of the market. These buyers are typically less affected by interest rate fluctuations as they may be paying in cash.

Builders are grappling with this new reality. They're facing high costs for land, labor, and materials, making price reductions difficult. Some large builders have tried to ease the burden for buyers by offering to buy down mortgage rates.

Their sheer size allows them to absorb some of these costs. However, as Peter Boockvar, a CNBC contributor, points out, “the entire new build industry is selling new homes at a pace below the 5-year average.” This suggests these efforts may not be enough to completely offset the affordability challenges.

Challenges for Low- and Middle-Income Earners

The data paints a concerning picture for low- and middle-income earners. A new index launched by the National Association of Home Builders (NAHB) and Wells Fargo revealed that in the first quarter of 2024, 38% of a median household income nationally was required to afford the mortgage payment on a median-priced new single-family home. This number jumps to a staggering 77% for low-income families earning only 50% of the area's median income.

While there's a persistent shortage of homes on the market, driving prices up for both new and existing properties, simply building more houses isn't a silver bullet. While an increase in overall supply would undoubtedly help, it's important to consider the type of housing being built.

The current market landscape favors single-family homes, which tend to be more expensive than condos, townhouses, or multi-family units. Additionally, many new construction projects are located in suburbs or exurbs, further out from city centers.

This can be a barrier for low- and middle-income earners who may rely on public transportation or prefer a more walkable urban environment. Zoning regulations and lengthy permitting processes can also hinder the development of more affordable housing options in areas with high demand.

“The lack of housing units is the primary cause of growing housing affordability challenges,” says Robert Dietz, NAHB's chief economist. He urges policymakers to enact changes that would allow builders to construct more homes, such as streamlining permit approvals, investing in skilled labor training, and addressing issues in the building material supply chain.

Forecast for the Remainder of 2024:

Experts are divided on the exact trajectory of new home sales in 2024. Here are some conflicting forces at play:

  • Potential Rise in Sales: Organizations like the National Association of Realtors (NAR) predict a slight increase in sales compared to 2023. This is based on the persistent shortage of homes on the market, which could still drive some buyers towards new construction.
  • Headwinds from Affordability: However, the significant jump in interest rates and overall affordability concerns could dampen sales activity. If rates continue to climb or home prices rise further, it could push many potential buyers out of the market.

The Bottom Line: The forecast for new home sales in 2024 remains uncertain. It will likely depend on how interest rates fluctuate and how builders manage to address affordability concerns. Builders may need to offer incentives or shift their focus towards more affordable housing options to attract buyers in this changing market.

Navigating the New Homes Market

So, what does this mean for you if you're in the market for a new home? Be prepared to face a more competitive landscape with higher prices and interest rates. Carefully assess your budget and explore all your options. Don't be afraid to negotiate with builders and consider all the financial incentives they might offer. Remember, knowledge is power in this market, so do your research and be a well-informed buyer.

Here are some additional tips for navigating the current housing market:

  • Get pre-approved for a mortgage: This will give you a clear picture of your budget and make you a more attractive buyer to sellers.
  • Be flexible with your search criteria: If you're open to different locations, house sizes, or move-in timelines, you may find better deals.
  • Consider a fixer-upper: You can potentially find a good deal on a home that needs some work, but be sure to factor in the cost of renovations.

By staying informed, being patient, and making smart decisions, you can still achieve your dream of homeownership in this evolving market.

ALSO READ:

New Home Sales Trends and Forecast for 2024

Is the Housing Market Shifting? Key Trends to Watch (April Report)

U.S. Housing Market Intelligence Report (April 2010)

by

Categories are graded from A thru F:

Economic Growth:  D+
Spending remains high and income improved, but the unemployment level remains very high. Overall economic growth improved slightly this month, and the results for our economic growth metrics were generally positive. The revised fourth quarter GDP growth rate increased to 5.6%. The pace of job losses eased this month, and the number of mass layoff events is plummeting, but employment has still declined 1.7% year over year.

The unemployment rate was flat this month at 9.7%, but the broader measure of unemployment, the U-6, increased to 16.9%. The length of unemployment in the labor force increased to 31.2 weeks this month, reaching a record high level since the BLS began tracking the statistic in 1948. Personal income improved and has returned to positive year-over-year growth for the second time since December 2008, increasing by 2.0%. The CPI (all items) increased to 2.3% from one year ago, while the Core CPI (minus food and energy) dropped to 1.1%.

Leading Indicators:  C+

Overall leading indicators held relatively steady this month, but several individual metrics actually improved. The Leading Economic Index has increased for the past eleven consecutive months. The ECRI Leading Index – an indicator of future U.S. growth – increased 13.9% year-over-year, and has experienced positive year-over-year growth for the past 10 months. Stocks improved once again in March, and all four major indices have now experienced large positive year-over-year growth, ranging from +43% to +57%.

[Read more…]

U.S. Housing Market Intelligence Report (March 2010)

by

Categories are graded from A thru F:

Economic Growth: D+
Overall economic growth was about the same this month compared to last, and the results for our economic growth metrics were mixed. The revised fourth quarter GDP growth rate increased to 5.9% from the preliminary estimate of 5.7%. Much of the growth was still the result of recent government stimulus and an increase in inventories. The pace of job losses also eased this month, although in the last 12 months the U.S. has lost 3.24 million jobs, which is equal to a decline of 2.5% of the total payroll workforce. The unemployment rate remained flat this month at 9.7%, while the broader measure of unemployment, the U-6, increased to 16.8%. The length of unemployment in the labor force declined slightly to just under 30 weeks this month, yet remains the second highest month on record since the BLS began tracking the statistic in 1948. Personal income improved in January and has returned to positive year-over-year growth for the first time since December 2008, increasing by 1.1%. The CPI (all items) decreased to 2.6% from one year ago, while the Core CPI (minus food and energy) also dropped to 1.6%.

Leading Indicators: C
Overall leading indicators held relatively steady this month, but several individual metrics actually improved. The Leading Economic Index 6-month growth rate declined in January to 9.8% from 12.2% last month, and remains very high compared to history. The ECRI Leading Index – an indicator of future U.S. growth – increased in January to its highest level since May 2008. The index increased 21.5% year-over-year, and has experienced positive year-over-year growth for the past 8 months. Stocks improved in February after declining in January, and all four major indices have now experienced large positive year-over-year growth, ranging from +46% to +62%. The S&P Homebuilding Index also improved this month. The spread between corporate bonds and the 10-year treasury fell in January, declining to 160 bps after peaking at nearly 270 bps in March. Since the 10-year treasury is seen as a risk-free investment, the spread between corporate bonds and the 10-year treasury displays the perceived risk of investing in corporate bonds, which has declined recently as Wall Street has become less worried about businesses failing. According to the 4th quarter CEO Confidence Index, CEOs are now much more confident about the economy. Despite the increase, the outlook index remains lower than earlier this decade. Business credit availability remains very poor, but deteriorated at a slower rate in the first quarter of 2010.

[Read more…]

U.S. Housing Market Intelligence Report (December 2009)

by

Categories are graded from A thru F:

Economic Growth: D
The economy remains weak and although some indicators have improved compared to last month, they are improving from very low numbers. The third quarter GDP growth rate was revised downward to +2.8% from the preliminary report of +3.5%. Despite the downward revision, it still marks a great improvement from the second-quarter, and is the first quarterly increase in four quarters.

Job losses have eased slightly compared to last month, yet remain awful compared to history. In the last 12 months the U.S. has lost nearly 4.7 million jobs, which is equal to a decline of 3.4% of the total payroll workforce – representing one of the largest declines in 60 years. The headline unemployment rate surprisingly declined this month, reaching 10.0% in November, down from 10.2% in October.

The U-6, a broader measure of unemployment that covers part-time workers who would like full-time work and those who have given up looking for work, also decreased to 17.2% in November, down from 17.5% in October. Mass layoff events – defined as a cut of 50 or more jobs from a single employer – eased once again in October to 2,127, and marks the first year-over-year decline since August 2007, representing a 3.5% drop compared to last year.

The length of time required to find employment continues to increase, with job seekers taking over twice the normal length of time to find employment. The November CPI (all items) rose to 1.8% from one year ago, while the Core CPI (minus food & energy) remained flat at 1.7%.

Leading Indicators: C-
The U.S. leading indicators took a leg down this month after a run of steady improvements in recent months. In October, the Leading Economic Index 6-month growth rate declined to 10.2%, yet remains one of the largest year-over-year growth rates on record since 1983. Although the ECRI Leading Index, which is a gauge of future economic growth, also declined to 23% since one year ago, it still represents one of the largest growth rates since ECRI began tracking the statistic in 1968.

Stocks continued to perform well throughout November. All four major indices we track have now posted positive year-over-year results, ranging from +17% to +40%, compared to one year ago. The S&P Homebuilding Index inched up in November and has shown a year-over-year improvement for the second time since April 2006. The spread between corporate bonds and the 10-year treasury increased slightly in November, reaching 177 bps. Since the 10-year treasury is seen as a risk free investment, the spread between corporate bonds and the 10-year treasury displays the perceived risk of investing in corporate bonds, which has declined recently as Wall Street has become less worried about businesses failing. CEOs are now much more confident about the economy, according to the CEO Confidence Index.

Affordability: C-
Affordability improved once again this month as home prices and mortgage rates continued to decline. Our housing-cost-to-income ratio has fallen to 26.1%, which is near the lowest level since data for the index began in 1981. Homeownership costs have fallen drastically in the past year, and now owning the median-priced home is just $54 more expensive than renting the average apartment – and in many parts of the country homeownership costs much less. Due to large job losses and government furloughs, household income has fallen 4% year-over-year to $53,293. Despite the decline in incomes, the median-home-price-to-income ratio remains below the historical average, currently at 3.2. The 30-year fixed mortgage rate continued to decline, reaching 4.78% by November month-end, while adjustable mortgage rates fell to 4.35%. The Fed’s overnight lending target rate remains at a range of 0.00% to 0.25%, which is the lowest level on record. The share of ARM applications declined to 4.8% in the last week of November which is a significantly smaller share than the peak level of 35% of total applications in early 2005.

Consumer Behavior: D-
In general, consumer behavior declined compared to last month. Consumer confidence experienced a negligible uptick compared to last month, reaching 49.5, and remains very low compared to history. Consumer sentiment declined in November to 67.4 and also remains well below the historical average. The Consumer Comfort Index increased slightly in November to a monthly average of -46.4. The personal savings rate fell to 4.4%, which is down from a recent peak in May of 6.9%. The U.S. net worth increased nearly $2.7 trillion dollars in the third quarter from the prior quarter. Despite the recent quarterly improvement, the decline year-over-year of $3.4 trillion remains one of the largest on record. The Misery Index – which is based on the unemployment rate and inflation – increased this month.

Existing Home Market: C-
The change from last month in the existing home market was mixed. According to the National Association of Realtors (NAR), seasonally adjusted annual resale activity continued to experience large gains in October, rising to 6.1 million home sales, and improving 10% from last month. The 12-month rolling count of resale sales activity has also improved for four consecutive months. Resale sales have experienced an increase due to the $8,000 federal tax credit that was set to expire November 30th, before it got extended to Spring 2010. The national median price of an existing single-family home fell to $173,100 in October from $175,900 in September, and has fallen 7% year-over-year. The pace of decline in the Case-Shiller national index, which tracks paired sales, improved drastically in the third quarter, and marks only the second time in over three years that the index decline eased. Although the Case-Shiller national index remains down nearly 9% year-over-year, it is a sharp improvement from 19% decline reported in the first quarter. The monthly 10-market and 20-market Case-Shiller indices also remain down year-over-year, yet have experienced month-over-month improvements since May, and the annual declines have eased in recent months. The number of unsold homes declined again in October, and fell to 7.0 months of supply, reaching very close to the historical average. In October, pending home sales volume improved again, increasing almost 32% year-over-year. As of the third quarter, 23% of all homes with a mortgage throughout the U.S. were worth less than the original value of the mortgage.

New Home Market: D
The new home market was mixed this month. Builder confidence declined in December as the Housing Market Index fell to 16. The seasonally adjusted new home sales volume increased in October compared to September, reaching 430,000 transactions – up 5.1% year-over-year. The median single-family new home price increased to $212,200 in October, but has declined 0.5% year-over-year. The inventory of unsold homes fell to 6.7 months, down from 7.4 months last month, and is a large improvement compared to 12.5 months of supply in the beginning of 2009.

Repairs and Remodeling: D-
The conditions for repairs and remodeling remain poor this month. Homeowner improvement activity worsened in the third quarter, representing a decline of 9.4% year-over-year. The Remodeling Market Index improved to 39.8 in the third quarter, and has rapidly rebounded after bottoming in the fourth quarter of 2008. Despite the recent increases, the index remains well below the historical average of 50. The decline in residential construction eased slightly in October, although it has fallen 24% year-over-year.

Housing Supply: F
Housing supply worsened this month. Total completions improved 9% compared to the prior month, reaching 810,000, although they have fallen 25% year-over-year. Seasonally adjusted new home starts increased this month, as single-family starts rose 2% and multifamily starts improved 67% compared to last month. Seasonally adjusted total permits also increased in November to 584,000 units. Total permit activity has fallen 7% year-over-year and over 74% since its most recent peak in September 2005. Although vacancy rates in the U.S. have improved in recent quarters, the majority of the U.S. remains oversupplied compared to history. Just four states in the U.S. are currently undersupplied – Texas, Louisiana, West Virginia and Iowa.

* US Building Market Intelligence™ report is produced by John Burns Real Estate Consulting.

Blog Posts

Contact

Norada Real Estate Investments 30251 Golden Lantern, Suite E-261 Laguna Niguel, CA 92677

(949) 218-6668
(800) 611-3060
BBB