What’s Trending In Real Estate – May

REA Newsletter 5.30.24

Moving Trends May 2024 - REA Accounting Newsletter

Construction of new homes ticked up last month despite higher mortgage rates, partly reversing a dramatic slump in March.

Housing starts rose 5.7% in April from March, to a seasonally adjusted annual rate of 1.36 million, according to data released Thursday by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. But they fell 0.6 percent from a year ago.

“The modest rebound in housing starts in April confirmed that the slump the month before was a weather-related blip,” says Capital Economics property economist Thomas Ryan. “But the recovery wasn’t as strong as we had anticipated.”

With a dearth of existing homes on the market, new construction has played a key role in meeting buyer demand in recent months. But there are signs that higher mortgage rates are weighing on homebuilders, with a key measure of builder confidence plunging last month. Mortgage rates jumped back above 7% in April, ending the month at 7.17%, according to Freddie Mac.

April’s construction rebound was due solely to a jump in multifamily housing starts, which surged 30% from the prior month to an annual rate of 329,000. Despite the monthly gain, multifamily construction starts are down 25.9% from a year ago and remain well below historical averages.

Single-family home starts were roughly flat from March to April, declining by less than 1 percent. Still, new-home construction was up 17.9% from a year ago.

Moving Trends May 2024 - REA Accounting Newsletter

Existing-home sales posted a slight gain last month, breaking a streak of five consecutive monthly declines and foreshadowing what is expected to be a more favorable real estate market in 2024.

The National Association of REALTORS® reported Wednesday that existing-home sales, which are completed transactions for single-family homes, townhomes, condos and co-ops, rose 0.8% in November. That figure is likely to grow in the coming months as borrowing costs fall, says NAR Chief Economist Lawrence Yun. Mortgage rates averaged 6.95% last week after reaching nearly 8% earlier this fall.

Still, November existing-home sales were down 7.3% from a year earlier, NAR reports. Home prices, which are still rising due to low inventory, are pressing on buyers’ budgets. Prices were up 4% year over year in November, reaching a median of $387,600. “Only a dramatic rise in supply will dampen price appreciation,” Yun says.

More Supply Could Be Coming

Home buyers continue to face limited options on the market, and many homeowners who locked in ultra-low mortgage rates in recent years remain reluctant to sell. That’s helping to keep housing inventory at historical lows. Total inventory in November was down 1.7% month over month but was up 0.9% year over year.

What's Trending In Real Estate

At The Close, we always have our finger on the pulse, so we know that some real estate trends come and go, and some change our industry forever. We’ve rounded up our top five real estate topics and trends for this year and predicted how they will impact us and our businesses. Plus, we offer the tools agents will need to capitalize on these changes and take advantage of the opportunities they bring. We expect a healthier market and some mind-blowing tech—but no matter what, we’re optimistic that 2024 will be anything but boring. 

1. Moving to the Southern States

People are moving to different states more than ever. More specifically, one of the hottest real estate industry trends is people moving to the South. The reasons are simple: strong job markets (plus the ability to work remotely), more space, housing is more affordable, and (typically) one finds a slower pace of life. Storage Cafe did some deep analysis to back up the trend we’re already seeing firsthand in real estate. 

  • A record number (8.2 million people) moved across state lines in 2022 (the most recent year for data).
  • Texas, Florida, North Carolina, and Georgia are in the top five states where people of all ages relocate. 
  • Connecticut is the only state in the top 10 for relocation that’s not in the sun belt.
  • Millennials comprise the largest percentage (34%, or 2.8 million people) of interstate moves.
  • The average square footage of a home in the south increased in the past five years to an average of 2,608.
  • Moving from California to South Carolina, residents could save an average of $430,000 on a home.

Moving Trends May 2024 - REA Accounting Newsletter

The average family spent nearly a quarter of their income on mortgage payments during the first three months of this year, according to a new report.

The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $2,037 in the first quarter, the National Association of Realtors® said in the report on Wednesday. That was down 5.7% from the fourth quarter of 2023, when mortgage rates hit their recent peak. But the average monthly payment was still up 9.3% from one year ago, an increase of $173.

Families typically spent 24.2% of their income on mortgage payments in the three months through March, down from 26.1% in the prior quarter but up 23.3% from a year ago. First-time buyers typically spent 36.5% of their family income on mortgage payments.

“We know that families are spending more to buy a home in today’s market compared with one year ago and broader historic norms,” says Realtor.com Chief Economist Danielle Hale. “As both home prices and mortgage rates have climbed, families have to choose between not buying, buying and downgrading their must-have list, or buying and putting more of their paycheck toward the purchase.”

What's Trending In Real Estate

Economists at the Texas Real Estate Research Center at Texas A&M (TRERC) released their 2024 outlook for real estate in the housing, commercial, and land sectors of the Texas economy. The comprehensive analysis of market behaviors draws attention to the most influential, big picture trends that impact real estate asset markets in Texas.

“Given the powerful economic influence of the state’s real estate assets, we focused our new forecast on real estate decision makers who shape our economy and impact more than 30 million Texans,” said TRERC Research Director Daniel Oney, Ph.D. “Texas is a real estate trendsetter in the U.S. when it comes to residential, commercial, and land markets, so we thoughtfully analyzed more data than usual this year to help us determine if the state’s statistics from the previous year could be sustainable in 2024.”

According to Pamela Canon, TRERC Executive Director, the reformatted forecast delivers invaluable insights into the residential, commercial, and land markets of Texas, providing an economic roadmap for navigating the state’s vibrant real estate landscape.

“Our consensus at the Center was to deliver a new and improved economic outlook for the real estate stakeholders in every asset market in 2024,” Canon said. “We wanted to connect the dots between data and risks for better real estate intelligence by offering relevant and reliable information to guide decision makers across the state.”

Texas has consistently set the pace for real estate trends, with DFW, Houston, Austin, and San Antonio dominating the U.S. market in 2023. As the state’s influence continues to shape the nation, the 2024 Texas Real Estate Forecast delves into the sustainability of this trend.

Moving Trends May 2024 - REA Accounting Newsletter

California, with its booming tech industry and iconic coastline, has long been a magnet for homebuyers. Despite recent price fluctuations in some areas, the Golden State’s housing market remains a complex and dynamic landscape. This article delves into the current state of California’s housing market, exploring trends, affordability considerations, and regional variations.

With a robust start to the spring homebuying season and a record-setting median home price of $904,210, California’s housing market is poised for further growth and resilience in the months ahead. Here are the latest trends in this housing market.

California Housing Market Trends

The spring homebuying season in California has commenced with a promising start, showcasing the resilience of the state’s housing market. Existing, single-family home sales surged to 275,540 in April on a seasonally adjusted annualized rate, marking a 3.0 percent increase from March and a notable 4.4 percent rise from April 2023, according to C.A.R.

Home Prices Hit a New High

The most striking aspect of the report is the surge in home prices. The statewide median price reached a staggering $904,210, a new all-time high. This represents an 11.4% increase from April 2023 and a 5.8% jump from March of this year. This marks the 10th consecutive month of annual price increases in California, a trend that shows no signs of abating in the immediate future.

Experts point to several factors driving this sustained growth. Tight inventory remains a key issue. The supply of available homes has been lagging behind demand for years, and this imbalance continues to put upward pressure on prices. Additionally, California’s strong job market and overall economic stability are fueling buyer demand, particularly among higher-earning earners who are less impacted by rising interest rates.