Nationally, Home Sales are Up and Prices are Down: What Now?
Home sales are up.
In February, total home sales in the U.S. rose 14.5% from the month prior. That jump ended a 12-month streak of declines in national home sales, and itâs the largest percent increase since July 2020. The sale of new construction homes has also increased, with numbers up for the third straight month in February.
Inventory, or the number of homes available on the market, is still low in most areas, and mortgage rates are still highâso why are home sales spiking now? While 14.5% feels like a large increase and does indicate a change in the market, itâs important to note that sales are still down year-over-year. Low affordability and low inventory drove sales down dramatically last year, so the increase weâre seeing now is more of a correction than a true spike.
Home prices are coming down.
The National Association of Realtors also just reported that home prices have dropped 0.2% year-over-year.
Less than one percent? Why does that matter? That number may not seem like a lot, but itâs significant because itâs a departure from a consistent stream of price increases. This is the first time in almost 11 years that home prices have shown an annual decrease.
Does that mean the market is going to crash? Not quite.
Driven by the ultra-low inventory and extreme demand of pandemic-era homebuying, home prices recently reached all-time highs. The current decrease is simply a correction from those sky-high prices, a relaxation of extremely tight market conditionsâand a result of high mortgage rates.
But whatâs to prevent prices from continuing to dropâand even heading into crash territory? Inventory across the country remains low. Thereâs only a 2.6-month supply of homes in the U.S. at the current rate of sale, compared to the balanced-market benchmark of a 6-month supply. Additionally, mortgage rates are starting to come down, which will increase buyer competition. Generally, those two factors drive enough demand to prevent a severe drop in home prices.
What does that mean for you? It depends on where you live, and whether youâre looking to buy or sell. In some regions, prices are dropping even faster while in others, prices are holding steady (or even continuing to climb).
Should you jump into the real estate market now?
The answer to that question is complex and depends largely on your personal situation.
Overall, buyers should take advantage of slipping mortgage rates and dropping prices. If your finances are in order and youâre ready to buy your dream home, low inventory shouldnât stand in your wayâand if you have the right real estate agent, it wonât. Just remember, if you want to buy now, youâll need to come in with a strong offer and be ready to negotiate.
Selling a home? Letâs do it. As mortgage rates come down, buyers who have been sitting on the sidelines will jump in, and it will be easier for your real estate agent to find the perfect match for your property. Just remember, while most regions of the country still favor sellers and most sellers have seen their home values skyrocket, your expectation for your sale price should look a little different this year than it might have in 2021 or 2022. Whatâs the perfect price to attract buyers? Letâs talk about it.
Weâve got this.
Navigating the real estate market amid shifting conditions and recession fears can be tricky, but weâve got your back. Whether youâre looking to buy, sell, or you just want to know what your home is worth these days, get in touch. We canât wait to make your goals a reality.