In January 2024, the average 30-year fixed-rate mortgage for single-family homes dropped to a low of 6.6%, but quickly rose back up to 6.9% due to stubborn inflation affecting long-term yield bonds, according to a report by Marcus & Millichap. This led the National Association of Realtors’ Realtor.com to report that “the housing market isn’t off to a good start this year.” The NAR’s just-released “Pending Home Sales” report showed a decrease of 4.9% in pending home sales from December.
Additionally:
– Pending transactions fell by 8.8% compared with January in the previous year.
– All four regions in the U.S., including Northeast (-5%), Midwest (-11%), South (-9%) and West (-7%), experienced decreases in pending home sales on an annual basis.
NAR Chief Economist Lawrence Yun stated that while job opportunities are strong and total wealth is at record highs, consumers are more sensitive than usual towards changes in mortgage rates which has impacted home sales negatively.
Realtor.com’s senior economic research analyst Hannah Jones added that buyer demand is directly linked with mortgage rates and therefore an increase could result in slower seasonally adjusted sales during spring when buying activity typically increases.
On another note…
Recent multifamily reports have shown flat or negative rent growth due increased unit deliveries despite high demand driven by single-family housing fundamentals.
However, ApartmentList reported positive month-over-month rent growth (+0.2%) for February after experiencing negative growth throughout most of last year; although overall there was still -1.% decline compared with February last year as per their latest data release on March first week . Moreover , vacancy rate remains at around % indicating consistent easing over past two years but analysts expect it might continue given expected completions this coming months .
But wait…
Marcus & Millichap predicts new construction will reach all-time high of 480,000 units in the near future but this will be followed by a slowdown. They also reported that multifamily starts fell by 37% year-over-year in January, making it the slowest pace since May last year and permitting activity dropped by 23% compared with same month previous year.
In conclusion, while short-term view shows an increase in vacancies due to new deliveries; analysts believe that construction levels are reaching their peak and may decline soon. This indicates a potential stabilization for the multifamily sector.
