Seeing the forest for the trees. It’s still there, and we will someday find our way out

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Published Date 11/13/2023

Okay. Forget the majestic forest idea. It’s really an extended game of whack-a-mole. Good news raises its head just to see a bad mole pop up you can’t seem to whack fast enough. And our arms are getting tired. In Realtor.com’s Margaret Heidenry’s words, “The housing market these days seems to meet any sign of good news with a dose of bad.”

Heidenry points out how mortgage rates fell for the second week in a row, home prices marched higher for the week ending Nov. 4. “This past week, the nation’s median listing price ticked up once again as the market continued to face tight inventory conditions,” notes Realtor.com economic research analyst Hannah Jones.

Her analysis found that the median cost of buying a home—which averaged $425,000 in October—continues to hold the unaffordable course, rising 1.0% for the week ending Nov. 4 compared with the same week last year. As for describing the holding power of unforgiving median home prices since mid-July, she responds, “Fairly flat or growing slightly on a year-over-year basis.”

How could we have known back in the days of 3% interest rates that just a few years later we would constantly be searching for that glimmer of good news as a beacon of hope. One such glimmer is that listings rose 0.6% for the week ending Nov. 4. The glimmer fades, however, when — for two weeks in a row — “...the trend has reversed as new listings during the week outpaced the same week in the previous year,” says Jones.

If we were to ask that proverbial genie to grant us one wish right now (aside from bringing rates down like a lead weight), it would be to have an avalanche of new listings hit the market.

Ain’t gonna happen, says Jones. Instead, “a lack of growth in new listings is likely to continue to weigh on existing-home sales in the months ahead.”

While fresh listings ticked up, active inventory—a mix of new and old listings—shrank 0.2% for the week ending Nov. 4 in relation to last year. Or, as Jones puts it, “housing remains undersupplied.” Just about anything reasonably priced gets snapped up so fast it’s like the Black Friday sales of old (back when they took place on only one day of the year).

That’s due in part to sellers’ inability to buy anything at a reasonable rate once they slap their home on the market, slamming the door on thoughts of moving. “Homeowners are likely to continue to stay on the sidelines, limiting available inventory and propping up prices,” Jones adds.

If you want to place this all in perspective, “The number of for-sale homes registered 41.8% below typical pre-pandemic levels in October,” says Jones. Mortgage rates continue to be the key metric weighing down the housing market, with buyers wondering if there will be a thaw in rates this winter.

Of course, we look for scraps of hope. Perhaps we can cling to the reports that tell us recent employment data indicated a slowing job market. That, in turn, might affect the Federal Reserve’s future rate decisions by strengthening the belief that its current policy has been effective in reducing inflation. “If future economic data further supports signs of an economic slowdown, good things might happen in the housing market,” says Heidenry.

Jones, like many others, believes in natural law: What goes up must come down. “The Fed will be able to pause,” Jones explains, “and eventually pivot, their contractionary policy, which will help bring mortgage rates down.”

Realtor, TBWS

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