Home prices shot up dramatically YoY, increasing by 11%. This is the largest YoY increase since May ‘22. House prices were up 13%, with condos up 8%. Prices are now only 4% lower than the all-time highs in 2022. If this trajectory continues, the market will fully recover very soon.
|
Year-over-Year (YoY) |
Month-over-Month (MoM) |
|
|---|---|---|
|
Homes for Sale |
+16% |
+6% |
|
New Listings |
+21% |
+16% |
|
Homes in Escrow |
+5% |
-1% |
|
Closed Sales |
+14% |
+8% |
|
Median Sale Price |
+11% |
+2% |
It’s encouraging to see a significant increase in new listings YoY. It’s not surprising to see them increase MoM, given that we’re in full swing of the selling season, but buyers have to take comfort in seeing more homeowners than last year putting their homes on the market. Keep in mind that most of these homes entered escrow in March, and April was a tough month for rates, increasing almost every week. We will have to wait for the May numbers to see if that had much of an effect on sales.
Covid Madness Vs Now
As with every market cycle, prices go up, and prices go down. We are very close to the highs of 2022, when rates were roughly 2% lower than what they are now. Those buyers who purchased during Covid can take a sigh of relief knowing that their home values have recovered, with the added bonus of having much lower mortgage payments than buyers today. The general rule for a 30-year fixed is that every 1% rate change affects the mortgage payment by roughly 10%.
Inventory
A lot of new inventory has hit the market in the past few weeks. This could mainly be attributed to the spring selling season. It could also be influenced by the unlikely chance of rates coming down significantly, as some homeowners might have been waiting for rates to drop, allowing buyers to afford more and increasing the likelihood of a bidding war. However, as I will explain below, that may not be true, as we are in a market that is changing week by week.
Interest Rates
April was a terrible month for rates, with bad inflation news released almost weekly. Although, last Friday, data showed that job and wage growth was down, and unemployment was up. Investors see this type of news as positive for fighting inflation, and it will increase the chances of rate cuts, which will move the bond market and bring down mortgage rates. CPI data will be released next week, and if that is favorable to slowing down inflation, the hope is that the Fed will start cutting rates in September. Keep in mind that if I had written this report before Friday, I would be less optimistic as I am now of rates dropping. And it’s another example of how volatile interest rates are and how you can never predict them.
