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Home Prices Hit Record Highs
Even with interest rates at a two-decade high and mortgage applications and existing home sales slipping back to 20th-century levels, home prices continue to rise. The S&P CoreLogic Case-Shiller indices increased for the seventh consecutive month while the Federal Housing Finance Agency (FHFA) reports a ninth straight gain in its Housing Price Index (HMI).
Case-Shiller’s U.S. National Home Price NSA Index, which covers all nine U.S. census divisions, reported a 2.6 percent annual change in August, up from 1.0 percent in the previous month. The 10-City Composite showed an increase of 3.0 percent, compared to 1.0 percent in July and the 20-City Composite annual gain rose from 2.0 percent to 2.2 percent.
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Forecast of the Housing Market by 27th June, 2024
The US housing market is keeping its strength despite multiple economic challenges such as high interest rates as of 27th June, 2024. These are the current trends and future projections based on recent data and expert analysis:
Home Prices is rising continuously: Home prices have been on a steady increase with S&P CoreLogic Case-Shiller indices reporting gains for several months in a row.According to U.S. National Home Price NSA Index August saw a 2.6% annual change compared to 1.0% in the previous month.
Some regions experience higher price hikes than others where growth has slowed down or stabilized.For example;10-City Composite and 20-City Composite indices show respective year-over-year gains of 3.0% and 2.2%.
Rates Are High: Currently, mortgage rates stand at about 7% which is relatively high when compared against history.This affordability issue has not however significantly affected housing price growth but it has been slowing it down. Insufficient Inventory Levels: Low inventory levels continue being an obstacle within the industry thereby driving up costs.The months of supply (MOS) metric shows that there are not enough homes available for sale relative to how many buyers want them hence leading into bidding wars in many places.
Demand in Rental Market: Many potential homebuyers especially young adults and first-time buyers still find themselves renting due to expensive homes coupled with high-interest rates.This means demand for rentals will remain strong in some areas.
Price Growth: Expecting Moderate Increases: Experts anticipate that housing prices will keep rising but at a slower pace than before.CoreLogic Home Price Index predicts month-over-month growth rate of around 0.8% between April – May 2024 and a year-over-year increase of 3.4% from April 2024 – April 2025.
Long-Term Trends: By spring 2025, majority regions will see lower annual appreciation rates with more moderate growth closer aligned to historical norms.
Market Conditions and Continued Scarcity: Though new constructions are on the rise, supply levels are projected to remain low because of many years underbuilding.This imbalance is likely to sustain an upward pressure on prices for some time.
Interest Rate Impact: Stabilization or slight decrease in interest rates might relieve buyers and spur market activity.However, this outlook may change if inflation picks up again.
Economic & Political Factors:
Global Politics and Internal Politics: Geopolitical events as well as domestic political uncertainties such as the 2024 elections could disrupt economic stability which would have ripple effects on housing market dynamics.These unknowns can either stabilize or destabilize current trends.
Buyers: Those planning to buy should be ready for high-priced competitive markets characterized by high-interest rates.Financial preparedness is paramount including having a large down payment as well as exploring different loan options available in the market place.
Sellers: Although sellers stand to benefit from increased sale values they face stiff competition brought about by new builds hence need careful thought when pricing their properties so that they attract offers from potential purchasers.
Renters: Many people still find that renting is cheaper, but this may not be true in a few years if house costs fall and loan rates go down. In the middle of 2024, the American housing market has extremely expensive homes with very low selling rates. There are hardly any houses for sale because everyone wants to rent them out instead which is making prices skyrocket even more. Looking forward we can expect growth rates will slow down while supply remains tight due to builders facing difficulties such as high materials costs; however these predictions depend heavily upon what happens economically around us including politics and interest rates.