Understanding High Rates, Prices, and Inventory Trends

In the ever-changing realm of real estate, the interplay of high rates, soaring prices, and expanding inventory is reshaping the housing market landscape in 2024. From record-high prices to historic mortgage rate fluctuations, the market dynamics are evolving. Let's delve into the nuances of these trends and their impact on affordability, sales volume, and inventory levels. 

Understanding the Current Real Estate Trends

In June 2024, the real estate market witnessed a surge in prices, marking the fifth consecutive month of price growth and reaching an all-time high. This upward trend in prices has been consistent, with year-over-year growth for the past 12 months. While typical seasonality suggests a decline in prices starting in July, historical data indicates that prices tend to rise significantly in the first half of the year, followed by a more moderate decline in the second half.

Last year's price trajectory serves as a reference point, with prices rising by 13.7% from January 2023 to June 2023, followed by a 7.7% decline from June 2024 to January 2024. Despite the decline, there was still a year-over-year gain of 4.9%. This year is expected to follow a similar pattern, with potential differences influenced by factors such as anticipated rate cuts by the Federal Reserve.

Impact of Affordability and Inventory Trends

In the current market scenario, the combination of high mortgage rates and record prices has led to a decline in affordability to an all-time low. This affordability crunch has translated into decreased sales volume and a rise in inventory levels. Despite the growing inventory, demand remains relatively high compared to supply, as buyers continue to purchase homes at peak prices.

Analyzing historical data from the 1980s, we observe that even during a decade of high mortgage rates, home prices still appreciated, albeit at a slower pace. Today's strong economic conditions have similarly supported the resilience of home prices, despite the impact of elevated rates on sales volume and inventory growth.

Looking Ahead: Inventory Growth and Market Dynamics

The recent growth in inventory levels, reaching the highest point since August 2022 according to the National Association of REALTORS® (NAR), signals a positive shift in the undersupplied housing market. While the market remains undersupplied overall, the increasing inventory is expected to contribute to a moderation in rising home prices. 

As sales and new listings have been subdued due to climbing mortgage rates, the inventory is likely to continue expanding in the latter part of the year. While national trends provide valuable insights, regional variations and individual property dynamics play a crucial role in shaping the market landscape.

Local Lowdown: Tailored Insights for Your Area

For a more detailed analysis of the local market trends and property dynamics in your area, refer to our Local Lowdown section below. Our continued monitoring of the housing and economic markets aims to provide you with informed guidance for your buying or selling decisions. Stay tuned for updates on the evolving real estate landscape and how it may impact your real estate endeavors.