U.S. Housing Market Sees Record Growth in Existing Home Sales

In October 2024, existing home sales experienced a significant 1.6% month-over-month increase, marking the biggest gain since January 2022. This rise is attributed to falling mortgage rates in September, which encouraged more buyers to finalize their purchases. While challenges like fluctuating mortgage rates and election jitters remain, early signs of recovery post-election bring hope for continued market growth. Read on for an in-depth analysis of October’s housing market trends and predictions for 2024.

October’s Housing Market Milestone

October 2024 marked a turning point for the U.S. housing market:

• Existing home sales rose by 1.6% month-over-month to a seasonally adjusted annual rate of 4.18 million units.
• This was the first annual increase since November 2021, with sales climbing 1.7% year-over-year.
• Overall home sales, including newly built homes, also saw a 3.4% year-over-year increase.

The surge was fueled by buyers leveraging September's lower mortgage rates, taking advantage of increased purchasing power.

Factors Driving the Surge

Several key factors contributed to the October increase in home sales:

Impact of Mortgage Rates

• The Federal Reserve cut benchmark interest rates in September, leading to a temporary dip in mortgage rates.
• 30-year fixed mortgage rates hit a low of 6.08% in late September, sparking increased buyer activity.

Market Timing

• Buyers rushed to lock in lower rates before they climbed again in October to 6.78%.
• Redfin agents noted that many buyers assumed rates would continue dropping, driving September and October activity.

Challenges and Buyer Behavior in October

Despite the gains, October was not without its challenges:

• Mortgage rates climbed again in October, erasing some of the purchasing power buyers gained over the summer.
• Election-related uncertainty led some buyers to delay decisions, while economic jitters caused 15.5% of pending sales to fall through.
• The median time to sell a home increased to 41 days—the slowest October pace since 2019.

Redfin agents noted that some sellers struggled to attract buyers due to overpriced listings, contributing to a backlog of stale inventory.

Regional Insights and Market Variations

Real estate trends varied significantly across different regions:

Top Cities for Price Growth

• Milwaukee, WI: 13.6% increase in median sale price.
• Fort Lauderdale, FL: 13.3% increase.
• St. Louis, MO: 12.2% increase.

Cities with Declining Prices

• Austin, TX: 3.4% decrease in median sale price.
• San Antonio, TX: 1.3% decrease.

Pending sales saw significant growth in tech hubs like San Jose (32.1%) and San Francisco (25.3%), while regions like Tampa, FL, experienced notable declines.

What’s Next for the Housing Market?

As the dust settles post-election, early indicators suggest that demand is rebounding. Redfin reports a 25% year-over-year increase in buyer activity on its platform following the election weekend. However, mortgage rates remain volatile, and their trajectory will heavily influence the market’s future.

Redfin Economics Research Lead Chen Zhao predicts continued see-sawing rates, influenced by federal policies and broader economic conditions.

Tips for Homebuyers and Sellers in 2024

Advice for Buyers

• Monitor mortgage rates closely and act swiftly when rates dip.
• Work with knowledgeable agents to identify fairly priced properties in competitive markets.

Advice for Sellers

• Price homes realistically to attract serious buyers.
• Consider minor upgrades to make listings more appealing in a slower market.

FAQs About the Current Housing Market

Why did home sales rise in October?

Home sales increased primarily due to a temporary dip in mortgage rates, which boosted buyer activity.

How do mortgage rates influence home-buying trends?

Lower rates improve affordability, encouraging buyers to enter the market, while higher rates can dampen demand.

Which cities are experiencing the most growth in home sales?

Cities like Milwaukee, Fort Lauderdale, and St. Louis have seen significant growth, while tech hubs like San Jose and San Francisco lead in pending sales.

Conclusion

October 2024 was a pivotal month for the U.S. housing market, showcasing resilience despite challenges like fluctuating mortgage rates and election uncertainty. For buyers and sellers alike, staying informed and proactive will be key to navigating the year ahead.