In this installment of The Full Measure with Kevin Hecht, uncover April 2024 housing market insights, plus implications for real estate appraisers.
As we enter the second quarter of 2024, the U.S. economy finds itself at a unique juncture, characterized by the interplay of sustained consumer spending, complex government policies, and evolving global economic dynamics. The real gross domestic product (GDP) has experienced a moderate growth of 1.6%, marking a deceleration from the 3.4% observed in the previous quarter.
This growth is a reflection of various influential factors, particularly within the housing market, which contributed over 16% to the GDP for the first time since 2022. This significant increase, fueled by a 13.9% rise in residential fixed investment, highlights a strong demand for home construction and renovation.
However, the overall economic landscape is confronted with challenges stemming from an expanding trade deficit and restrained federal government spending, emphasizing the delicate balance between economic stability and the housing sector’s resilience.
Subscribe to our newsletter to get valuable economic insights, career tips, and more straight to your inbox.
April 2024 housing market insights
Existing and pending homes sales
March 2024 signified a pivotal shift in housing market dynamics. Existing home sales experienced a decline of 4.3%, with a discernible shift in buyer and seller expectations influenced by escalating mortgage rates and inflationary pressures. Despite this downturn, the median home sale price reached a new March record of $393,500, representing a 4.8% year-over-year increase.
Simultaneously, pending home sales witnessed a modest growth of 3.4%, indicating a cautious yet stabilizing market sentiment. This resilience in pending sales, despite high mortgage rates, suggests a market adapting to the evolving economic conditions. Notably, the inventory of existing homes showed improvement, potentially signaling price normalization that could alleviate broader inflationary pressures in the near term.
New home sales
The new home segment demonstrated unexpected strength, with March sales surging by 8.8%, translating to a year-over-year increase of 8.3%. This growth occurred despite the challenges posed by rising interest rates. The scarcity of existing home inventory has redirected buyer attention towards new construction, a trend particularly evident in the Northeast and West regions, where sales have increased substantially. The expanding inventory of new homes, up 10.2% from the previous year, coupled with price adjustments to meet market demands, underscores the critical role of this sector in mitigating housing shortages and shaping future market trends.
Inflation and mortgage rate trends
Inflation remains a formidable challenge, directly impacting mortgage rates and, consequently, the housing market. The core Personal Consumption Expenditures (PCE) index, a key inflation gauge, continues to persist above the Federal Reserve’s 2% target, exerting upward pressure on mortgage rates, which currently exceed 7%. This scenario has dampened buyer enthusiasm, as evidenced by a downturn in home purchase applications. The current landscape suggests a cautious outlook for buyers, with many opting to delay purchases in anticipation of potential economic relief and rate stabilization.
Implications for real estate appraisers
For real estate appraisers, these trends underscore the necessity for astute market awareness and adaptability. The current economic environment, characterized by fluctuating interest rates and a volatile inflationary landscape, demands a nuanced understanding of market dynamics to accurately assess property values and anticipate future shifts. Appraisers must consider broader economic indicators, such as inflation rates and GDP growth, in tandem with localized market conditions, including inventory levels and median price changes, to provide accurate and timely valuations.
Conclusion
As we progress through 2024, the real estate market continues to serve as a reflective mirror of broader economic conditions. Stakeholders, including appraisers, must navigate these waters with a strategic understanding of macroeconomic factors and localized market nuances. The interplay between consumer confidence, Federal Reserve policies, and market adaptability will be instrumental in shaping the trajectory of real estate values and investment decisions in the coming months and years.
Thank you for reading The Full Measure with Kevin Hecht: April 2024 Housing Market Insights. Subscribe to our newsletter to get valuable economic insights, career tips, and industry news right to your inbox.
