The August 2024 housing market experienced fluctuations, with both new and existing home sales showing changes in activity over the past few months. From shifts in home prices to the impact of external factors like hurricanes, recent trends offer critical insights into the future of the housing sector.
August 2024 Housing Market Shows New Homes Sales Remain Strong Year-Over-Year
In August, new home sales dropped by 4.7% compared to July, a notable decline after reaching the highest levels since February 2022. However, it’s important to highlight that despite the month-over-month drop, new home sales were still 10% higher than in August last year. This reflects ongoing demand in the new construction sector, even as buyers contend with higher mortgage rates and affordability challenges.
Unlike existing home sales based on closings, new home sales are tracked when contracts are signed, making them a valuable leading indicator for future housing market activity. This data suggests that while there may be some cooling in demand due to market conditions, new home construction remains a strong force in the market.
The median price of a new home in August was $420,600, down 5% from the same time last year. This decrease in pricing may signal a shift toward more affordable options in the market as builders respond to buyer demand for lower-priced homes. With affordability becoming a more significant concern, significantly as interest rates rise, the price drop is a positive sign for those purchasing newly built homes.
Existing Home Sales Face Ongoing Inventory Challenges and Price Increases
Existing home sales also saw a slight decline in August, falling just below July’s levels and remaining 4% lower than last year’s. The ongoing challenge in this segment of the market continues to be inventory. While inventories of existing homes are up 23% from last year, they remain stuck at historically low levels, with just a 4.2-month supply available nationwide. For context, a balanced market typically has around a 6-month supply of homes, meaning buyers are still facing tight competition and limited options.
Despite the challenges of low inventory, the median price of existing homes has risen. In August, the median price reached $416,700, up 3% compared to last year. This price increase reflects ongoing buyer demand and the limited number of homes available. Sellers in this market will likely benefit from the rising prices, but buyers may continue to face affordability pressures as home prices remain elevated.
The combination of rising prices and limited inventory drives fierce competition in the existing home market, with many homes receiving multiple offers and selling above the asking price. For those looking to buy, navigating this competitive landscape requires careful planning and a clear understanding of current market conditions.
Housing Starts and Building Permits Rebound After a Temporary Setback
After being temporarily impacted by Hurricane Beryl in July, housing starts rebounded in August with much stronger-than-expected results. Overall housing starts jumped 10% from July, far exceeding consensus forecasts. Single-family housing starts surging even further, increasing by 16% from the previous month and marking a 5% increase compared to August last year. This is a positive sign for the market, as it suggests builders are actively working to address the ongoing inventory shortages.
The surge in single-family housing starts is particularly encouraging, as this segment of the market is crucial for addressing the needs of homebuyers who are struggling to find existing homes. As more single-family homes are built, it may help ease supply challenges and offer buyers more options in the coming months.
Building permits—a leading indicator of future construction activity—also increased significantly in August. This points to continued momentum in the home-building sector, with more projects likely to break ground in the near future. The rise in building permits suggests that builders are optimistic about future demand, even as the broader economy faces uncertainty.
Looking Beyond the August 2024 Housing Market
The housing market showed mixed results in August, with both new and existing home sales seeing some declines compared to July. However, the year-over-year data shows that the market still appears resilient, with new home sales up 10% and single-family housing starts surging. Inventory challenges continue to plague the existing home market, but the increase in housing starts and building permits points to a potential easing of these pressures in the near future.
Staying informed on these market trends is essential for buyers, sellers, and industry professionals. As the housing sector continues to evolve, understanding how new construction, home prices, and inventory levels are changing will help you make better decisions moving forward. For updates on the real estate market, contact the Illinois title and escrow specialists at Plymouth Title Guaranty Corporation.