The September 2024 housing market presented a mixed bag of data, highlighting a complex landscape with contrasting trends in existing and new home sales. On one hand, sales of existing homes declined to their lowest level since October 2010, reflecting ongoing challenges like limited inventory and high prices.
On the other hand, new home sales showed signs of strength, rising both month-over-month and year-over-year. Adding another layer to the story, single-family housing starts and builder sentiment also pointed to potential optimism for future market conditions. Let’s break down what these numbers mean and how they could shape the housing market going forward.
Existing Home Sales Slide While Prices Rise
Sales of existing homes fell slightly in September compared to August, continuing a downward trend that has brought sales to their lowest since October 2010. This decline was anticipated, given the persistent challenges in the market. The median existing-home price in September was $404,500, representing a 3% increase from the same time last year. This price appreciation, despite declining sales, underscores the ongoing affordability issues many buyers face, as rising home prices and higher mortgage rates make homeownership increasingly out of reach.
Inventory remains a critical pain point in the existing home market. In September, there was just a 4.3-month supply of homes available for sale, well below the 6-month supply that is typical of a balanced market. This limited supply keeps upward pressure on prices, even as demand softens. However, when viewed from a different perspective, inventory levels were 23% higher than a year ago. This increase in inventory could be a sign of future stabilization in the market, but for now, the supply remains insufficient to meet demand. Overall, existing home sales continue to face headwinds, and the market remains challenging for prospective buyers.
Sales of New Homes Increase by 6% Year-Over-Year
In contrast to the decline in existing home sales, new home sales rose in September, signaling robust demand for new construction. Sales of new homes increased by 4% from August and were 6% higher compared to the same time last year. This growth indicates that more buyers are turning to new construction, possibly due to limited inventory in the resale market or because builders are offering incentives to attract buyers. The median new-home price in September was $426,300, slightly higher than the median price of existing homes, yet still appealing to buyers looking for modern amenities and customization options.
One key aspect of new home sales is that they are based on contracts signed rather than closings, making them a leading indicator of future housing market activity. The rise in new home sales suggests that demand remains relatively strong despite economic concerns and higher mortgage rates. With new home sales accounting for about 15% of the overall market, their growth could have a significant impact on overall housing trends. As builders continue to adjust to market conditions and supply chain challenges, the new construction segment remains an area of interest for both buyers and industry analysts.
Housing Starts & Builder Sentiment Show Encouragement for the September 2024 Housing Market
While the headline figure for overall housing starts in September showed a slight decline from August, the details paint a more positive picture. The weakness was entirely due to a drop in multi-family unit construction, while single-family housing starts rose by 3% to the highest level in five months. This increase in single-family starts is encouraging, as it reflects growing confidence among builders in the demand for detached homes. Additionally, single-family building permits, which are a leading indicator of future construction, also increased in September. This suggests that more construction projects are in the pipeline, potentially easing the inventory crunch in the coming months.
Home builder sentiment also saw an unexpected boost in September. The National Association of Home Builders (NAHB) survey reported a more optimistic outlook than anticipated, driven by factors like stabilizing material costs and resilient buyer interest. Builders are becoming more optimistic about the housing market’s future, and their confidence could lead to increased construction activity, providing some relief for the strained supply of homes. These positive developments in single-family housing starts and builder sentiment indicate that the construction sector is poised to play a crucial role in shaping the housing market’s trajectory as we move forward.
Looking Beyond the September 2024 Housing Market
September’s housing market trends highlight the contrasting dynamics at play: existing home sales continue to struggle due to high prices and limited inventory, while new home sales and single-family housing starts show signs of resilience. The rise in builder sentiment and the increase in single-family permits offer hope for future market stabilization.
As we look ahead, the housing market will continue to face challenges, but there are also opportunities for growth and improvement. For prospective homebuyers, sellers, and industry stakeholders, understanding these trends will be key to navigating the evolving landscape. For more information on the Illinois real estate market, please contact the title and escrow specialists at Plymouth Title Guaranty Corporation.