01/18/2024
Is there a shift in public confidence in the real estate market as we enter into 2024? There sure seems to be and I’m seeing it both in the stats and from my own limited experience this early in the year. That said, there is usually a seasonality effect i.e. there is nearly always a downtick in activity and sentiment in Q4 of any year and then often an uptick in Q1. I’ll talk about a couple of the indexes that I follow and I will share one recent real-life data point.
The National Association of Home Buyers (NAHB) Housing Market Index (HMI) is a monthly survey of home builders who are asked to rate current sales of single-family homes, sales expectations for the following 6 months and to rate traffic of prospective home buyers. The HMI jumped from a low of 34 in October to 44 in December. To speak to the typical seasonality, by comparison, the December ’22 HMI was 35, January ’23 was 42 and February ’23 was 44 so we are already ahead of 2023 from this prospective. In case you are wondering, 2023’s highest reading of 56 was hit in June.
The Home Purchase Sentiment Index® (HPSI), conducted by Fannie Mae, is a composite index designed to track consumers’ housing-related attitudes, intentions, and perceptions, using six questions from the National Housing Survey® (NHS). In short, it measures consumer optimism about the direction of mortgage rates, which in turn can spark optimism about the affordability of homes this year. The HPSI index jumped 4.5% month over month in December as mortgage rates dropped from 8% to 6.62% as of last week. This optimism should pull many buyers from the sidelines and back into the market for a home in the coming months.
I have had a very nicely renovated home on the market since October. Although there was a fair amount of traffic touring the home and at least two open houses in the past couple of months, we didn’t receive and offer until December. Unfortunately, that deal fell through and we put the house back on the market last Wednesday. Within hours of relisting, we had several showings scheduled and that pace continued through the weekend. On Monday we received an offer just over full price which we accepted. 60 days last quarter vs. 5 days this quarter!
So we have the stats pointing very positive and we have one (albeit just one) data point of real-life experience that tells me that the market has made a turn for Q124. Since I will be putting another 3 – 4 houses on the market during Q1, I will have a few more data points to share from my own experience. Stay tuned!!
