Where are home prices heading?
| In Sarasota County, last month there were more existing single-family homes for sale (82%), less new listings (-1.5%), and less sold homes (-13.7%) than a year ago. What’s notable is that last week (56%) of all listings had price reductions, 22% more than last year; median days on the market (63), 50% higher than a year ago. It means the demand for homes has not picked up from a year ago, further weighted down by higher mortgage rates. Most notably, this morning the Labor Department released the consumer price index (CPI) for March. It rose 3.5% from a year earlier, up from 3.2% in February. Moreover, the Fed’s preferred inflation gauge, core prices, which excludes the volatile food and energy sectors, rose 3.8% in March from a year ago, up 0.4% from February 2024. As I write this commentary, due to today’s higher inflation readings, the stock market is selling off, and the 10-year Treasury yield has spiked to 4.56% (yesterday it was 4.39%), pressuring mortgage rates (currently 6.8%), to go higher and stay higher for longer than anticipated just a few months ago. I do expect sales to increase. Last month pending sales rose 6.7%. However, if sales increase it will not be due to demand. It will be due to increasing supply. Last year sales were lackluster because of low supply. There were only 1,780 homes for sale in March 2023. But last year’s supply constrained market did not push prices higher; rather, prices softened 5-10%. Today, with 3,236 homes for sale, there are 82% more homes for sale than last year. Even so, with demand flat and interest rates remaining higher for longer, I expect prices to remain at current levels. |
Email this to a friend