Economic Update for Home Buyers and Sellers: Key Trends to Watch in October 2024

As we approach the final months 2024, the real estate market feels the ripple effects of a robust economy, inflation stabilization, and continued stock market gains. Both home buyers and sellers should note these latest economic updates, which offer insight into how these factors could shape the housing landscape.

1. Economic and Stock Market Growth: Good News for Housing

The U.S. economy continues to show remarkable resilience. Investor confidence has been bolstered by a string of stock market gains, with the Dow Jones and S&P 500 hitting all-time highs. This strong performance is primarily driven by cooling inflation and a brightening jobs picture, where unemployment claims have dropped, and retail sales have outpaced expectations. These positive indicators suggest that the feared recession has been avoided, creating a stable environment for the real estate market to thrive.

For home sellers, this steady economic growth is a positive sign. This means that many potential buyers have stable incomes, rising investment portfolios, and overall financial security, creating a larger pool of qualified buyers. If you're considering selling, now could be an excellent time to list your home, as buyers feel more confident in making significant financial decisions.

A strong economy also brings good news for buyers, though monitoring mortgage rates closely is essential. As long-term rates often follow bond yields, which remain steady this week, it's clear that mortgage rates have edged upward slightly. Even with the 30-year fixed mortgage rate reaching 6.44%, overall market stability may continue to fuel demand as many buyers seek to lock in rates before any potential increases.

2. Mortgage Rates: Slight Increases but Still Manageable

As of October 17, 2024, the Freddie Mac Primary Mortgage Survey showed a slight rise in mortgage rates. The 30-year fixed mortgage now sits at 6.44%, up from 6.32% last week, and the 15-year fixed rate is 5.63%, up from 5.41%. While rates have increased slightly, they remain lower than many historical levels and manageable for most buyers.

Locking in a rate now could protect you from further rate hikes if you are a homebuyer. With the Federal Reserve's recent easing of interest rates, there is some hope that mortgage rates may stabilize or even decline in the coming months. But timing is always key—if you find the right home at the correct rate, it may be wise not to wait.

For sellers, this slight increase in mortgage rates could encourage potential buyers to act sooner rather than later. As rates inch upward, buyers may rush to secure a deal before they rise further, creating more urgency in the market.

3. California Home Sales: Balancing Act Between Supply and Demand

September’s California existing-home sales data shows that the market continues to move, albeit with some fluctuations. Sales dipped 3.4% from August but were still up 5.1% year-over-year, signaling that demand remains strong. Meanwhile, the median home price in California dropped slightly from August to September, but it remains higher than a year ago, indicating long-term price appreciation.

For sellers, California’s slight price decrease offers an opportunity to attract buyers who may have been priced out of the market earlier in the year. The 3.6-month supply of homes—an increase from the previous month—means buyers have more options, but it’s still a seller’s market. Pricing your home competitively while the economy is strong could help you capitalize on motivated buyers.

The increased inventory should offer buyers more choices. With the median price of homes moderating and interest rates still within a manageable range, now could be a good time to buy before the year-end activity picks up. However, staying on top of local market trends and working closely with a real estate professional to navigate competitive areas is crucial.

4. Looking Ahead: What Home Buyers and Sellers Can Expect

As we move into the year's final quarter, economic stability and moderate inflation rates should continue to support the housing market. Buyers may find themselves in a more competitive landscape, while sellers can benefit from the rising demand created by a strong economy.

For buyers, keep an eye on interest rates and home prices as 2024 approaches. Now is the time to make an informed decision with the help of your real estate agent, ensuring you get the best deal possible. On the other hand, sellers should feel confident in listing their properties, knowing that qualified buyers are actively searching for homes.

Whether buying or selling, the remainder of 2024 presents opportunities in a market shaped by strong economic fundamentals, so be sure to position yourself wisely.

If you have questions, feel free to contact me.

Tina Lucarelli - Global Real Estate Advisor

Engel & Volkers Westlake Village

DRE 02102354