• US Housing Slowdown Amid Low Inventory and Rising Prices Challenges Industry Recovery

  • Nov 24 2024
  • Length: 3 mins
  • Podcast

US Housing Slowdown Amid Low Inventory and Rising Prices Challenges Industry Recovery

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  • Summary

  • The US housing industry is currently experiencing a slowdown, with recent market movements indicating a decline in demand and a rise in inventory. According to the S&P CoreLogic Case-Shiller Index, home prices increased by 4.2% year-over-year in August 2024, marking the 15th consecutive all-time high[4]. However, this growth is slower compared to the previous year, which saw a 19.28% increase[1].

    The decline in mortgage rates in July gave a slight boost to home sales, with total home sales rising 2.6% over the month to 4.7 million[2]. However, pending home sales declined 5.5% month-over-month in July, indicating a continued slowdown in the market. The homebuilder confidence index fell further to 39 in August, indicating poor building conditions over the next six months[2].

    The median sales price for existing homes increased 1% year-over-year to $404,500 in September 2024, the highest September median recorded by the National Association of Realtors (NAR)[4]. However, existing-home sales in September were down 3.5% from last year, and the volume of home sales has continued to soften over the course of 2024[4].

    The housing inventory remains low, with a 4.3-month supply of existing homes on the market as of September, up 23% from the previous year but still short of the 5-6 months needed for a balanced market[4]. The number of rental units permitted has contributed to an excess in the supply of rental units, with the average apartment vacancy rate at its highest level in over 20 years[3].

    In response to the current challenges, US housing industry leaders are focusing on affordability and inventory. Lawrence Yun, Chief Economist at NAR, notes that more supply is beginning to appear, which could be an early indicator of more home sales later[4]. Selma Hepp, Chief Economist at CoreLogic, emphasizes that lower mortgage rates would help spur home sales activity and drive more sellers to trade their existing homes, adding much-needed inventory to the market[4].

    Compared to the previous reporting period, the US housing industry has seen a slowdown in demand and a rise in inventory. The decline in mortgage rates has given a slight boost to home sales, but the market remains tight, with low inventory levels and high prices. Industry leaders are responding to these challenges by focusing on affordability and inventory, and the market is expected to remain muted in 2024 and 2025[2].
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