Welcome to today’s real estate news roundup! In the ever-changing housing market, we bring you the latest updates and insights. Forbes Advisor predicts when home prices will become affordable again in 2024, shedding light on the challenges faced by prospective buyers and the factors affecting the market. Santa Cruz Local keeps you informed about major housing and construction projects in Santa Cruz County, offering opportunities for community engagement. Meanwhile, the National Association of Home Builders (NAHB) provides valuable information on framing lumber prices and their impact on the housing market’s affordability. Discover more about these stories and dive into the fascinating world of real estate.
Housing Market Predictions For 2024: When Will Home Prices Be Affordable Again? – Forbes Advisor
What many had hoped would be a rosy spring home-buying season ended as a thorny challenge for many prospective home buyers already demoralized by a frustrating market. Yet, even as sales stalled amid elevated mortgage rates and home prices, one silver lining emerged—more resale inventory entered the market, which has begun to put some downward pressure on the pace of home price growth. Other good news for home shoppers is the decline in the median price for a new home—now below the median resale home price—even as builders continue offering incentives to lure buyers. Nonetheless, experts say the housing market will only see renewed momentum once mortgage rates drop enough to ease buyer affordability obstacles and incentivize homeowners locked in at low rates to move. Experts insist the housing market will improve despite high mortgage rates, out-of-reach home prices and sluggish sales transactions amid dampening demand. Unfortunately, hopeful buyers continue to see a delay in this yearned-for transformation, thanks to several ongoing headwinds. One is inflation taking its sweet time cooling off, further delaying the Federal Reserve from cutting the federal funds rate. Mortgage rates indirectly track this benchmark interest rate banks use as a guide for overnight lending. Consequently, with the federal funds rate at its highest level in over two decades, mortgage rates—and borrowers—are feeling the added impact on their ability to afford a home. Meanwhile, U.S. home prices remain unaffected by persistently high mortgage rates, posting an annual 6.3% gain in April, according to the latest S&P CoreLogic Case-Shiller Home Price Index. Even as this annual gain marked a slowdown from the 6.5% gain in March, the index still broke the previous month’s record high. Many experts expect a Fed rate cut will help stimulate the housing market, but it remains unclear when—and if—even a single cut will occur in 2024. For a housing recovery to occur, several conditions must unfold. “For the best possible outcome, we’d first need to see inventories of homes for sale turn considerably higher,” says Keith Gumbinger, vice president at online mortgage company HSH.com. “This additional inventory, in turn, would ease the upward pressure on home prices, leveling them off or perhaps helping them to settle back somewhat from peak or near-peak levels.” Of course, mortgage rates would need to cool off, which seems promising given the recent declines. The average 30-year fixed mortgage rate trended down over the course of June and early July, coming in at 6.95% for the week ending July 3. However, when mortgage rates finally go on the descent, Gumbinger says don’t hope they cool too quickly. Rapidly falling rates could create a surge of demand that wipes away any inventory gains, causing home prices to rebound. “Better that rate reductions happen at a metered pace, incrementally improving buyer opportunities over a stretch of time, rather than all at once,” Gumbinger says. He adds that mortgage rates returning to a more “normal” upper 4% to lower 5% range would also help the housing market, over time, return to 2014-2019 levels. Yet, Gumbinger predicts it could be a while before we return to those rates. Following years of litigation, the NAR has agreed to pay $418 million to settle a series of high-profile antitrust lawsuits filed in 2019 on behalf of home sellers. The settlement received preliminary court approval in April. A judge is expected to grant final approval in November. Meanwhile, NAR announced that the new required practices will go into effect on August 17. The required new rules prohibit broker compensation offers on multiple listing services (MLS), the private databases that allow local real estate brokers to publish and share information about residential property listings. Moreover, sellers will no longer be responsible for paying buyer broker commissions—upending an accepted practice that has been in place for years—and real estate agents participating in the MLS must establish written representation agreements with buyers. If you sold a home in the past ten years, you may be eligible for a small piece of this settlement pie. Visit realestatecommissionlitigation.com for more information about filing a claim. Despite more resale homes entering the market, the inventory shortage remains severe and likely will for some time, thanks to multiple headwinds. For one, many homeowners remain “locked in” at ultra-low mortgage rates, unwilling to exchange for a higher rate in a high-priced housing market. Consequently, demand continues to outpace housing supply—and likely will for a while. “I don’t expect to see a meaningful increase in the supply of existing homes for sale until mortgage rates are back down in the low 5% range, so probably not in 2024,” says Rick Sharga, founder and CEO of CJ Patrick Company, a market intelligence and business advisory firm. New home construction has provided some relief, but not enough to fill the inventory gap meaningfully. The U.S. remains 4.5 million homes short, up from 4.3 million a year ago, according to Zillow analysis. Entry-level home supply is particularly dire, contributing to an ongoing cycle of propped-up demand and inflated prices. Here’s what the latest home values look like around the country. Builder sentiment continues to wilt with the summer heat. High mortgage rates and sticky inflation are largely to blame for the dampened outlook for new construction, with builder confidence sliding from 45 to 43 in May, according to the most recent National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This is the second consecutive month of downward movement and negative sentiment. A reading of 50 or above means more builders see good conditions ahead for new construction. Meanwhile, the construction of new homes, which had been on a tear, helping to fill the hole left by scant resale inventory, has slowed. Permits for new single-family homes fell to their lowest seasonally adjusted annual rate since June 2023 amid builder blahs, dipping 2.9% month-over-month in May, according to the latest data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development (HUD). Housing starts were down 5.2%, and completions slid 8.5% from April. However, there’s a silver lining for hopeful buyers—25% of builders slashed prices in May to boost sales, and more were open to offering incentives. Current and anticipated home sales transactions fizzled across the board in May thanks to scorching-high mortgage rates. Here’s what the latest home sales data has to say. Existing-home sales dipped 0.7% in May, according to the latest report from NAR, marking the third straight month of declines as ascending mortgage rates and home prices deterred potential buyers. In May 2023, home buyers could get a mortgage rate well over half a percent lower at a time when homes were also more affordable. Sales also fell 2.8% compared to May last year. Experts believe home sales activity will perk up once inflation eases and the Fed finally starts to cut interest rates. Nonetheless, many prospective buyers—particularly first-time and lower-income home shoppers—will likely be left out in the cold, with the median price for an existing home in May soaring 5.8% from a year ago to a new record high of $419,300. “Home prices reaching new highs are creating a wider divide between those owning properties and those who wish to be first-time buyers,” said Lawrence Yun, chief economist at NAR, in the report. “The mortgage payment for a typical home today is more than double that of homes purchased before 2020.” One upside to fewer sales is that resale inventory has been loosening since December. The latest NAR data shows inventory growing 6.7% month-over-month, logging 1.28 million unsold homes at the end of March. Still, only 3.7 months of inventory remain at the current monthly sales pace. Most experts consider a balanced market between four and six months. Meanwhile, new homes are also not invulnerable to high mortgage rates despite their shiny appeal. Amid mortgage rates hovering close to or above 7%, May sales of newly constructed single-family houses plunged 11.7% compared to April and 16.5% from a year ago, according to the latest U.S. Census Bureau and HUD data. The good news for prospective buyers is that the slow pace of new home sales puts new home inventory at a level not seen since early 2008, according to Lisa Sturtevant, chief economist at Bright MLS. “Buyers that remain in the market are starting to have more leverage, and sellers of existing homes are increasingly offering concessions, including help with closing costs and money toward repairs,” said Sturtevant. Moreover, those shopping for new construction will be happy to hear that the median price for a new home in May fell $500 to $417,400—nearly two thousand dollars below the median existing-home price. See More And don’t expect home sales numbers to heat up much as we move through summer. NAR’s Pending Homes Sales Index dipped 2.1% in May. This reading comes on the heels of a dismal April when the index plummeted 7.7%. Mortgage rates remained above 7% over much of those two months. Year-over-year pending transactions also took a nosedive in May, sinking 6.6%. A pending home sale marks the point in the purchase transaction when the buyer and seller agree on price and terms and is considered a leading indicator of a closed existing-home sale within the next one to two months. With a 70.8 index reading, the pending sales pace remains at a four-year low—or the weakest since the earliest days of the pandemic. However, despite home prices continuing to break records, experts expect loosening inventory and evidence of a slowing economy to
Housing and construction projects in Santa Cruz County – Santa Cruz Local
Stay up to date on major housing and construction projects across Santa Cruz County and find out how to make your voice heard. Explore the latest developments in water and highway projects as well. Discover how you can stay informed and get involved in shaping the future of housing and construction in Santa Cruz County.
Framing Lumber Prices | NAHB
NAHB continually tracks the latest lumber prices and provides an overview of the behaviors within the U.S. framing lumber market. Softwood lumber prices have been volatile in recent years due to increased demand, rising tariffs, supply-chain bottlenecks, and insufficient domestic production. The pricing of softwood lumber directly impacts the price of a new home, contributing to declining affordability in the housing market. NAHB has advocated for actions to address high lumber prices. To learn more about framing lumber prices and NAHB’s efforts, read the full report.