As we enter 2024, the average 30-year fixed-rate mortgage for single-family homes has fluctuated. In January, it reached a low of 6.6%, but quickly rose to 6.9% due to inflation’s impact on long-term yield bonds according to a Marcus & Millichap report.
This news was not well received by the National Association of Realtors’ Realtor.com, who reported a drop in pending home sales by 4.9% month-over-month in their “Pending Home Sales” report released recently.
Furthermore:
– Pending transactions decreased by 8.8% from January of last year.
– All four regions in the U.S saw declines in pending home sales compared to last year; Northeast (-5.5%), Midwest (-11/6%), South (-9%) and West (7%).
NAR Chief Economist Lawrence Yun noted that while job market remains strong and total wealth is at record highs, consumers are more sensitive towards changes in mortgage rates which have impacted home sales negatively.
Realtor.com’s senior economic research analyst Hannah Jones added that buyer demand is closely tied with mortgage rates and an increase could slow down seasonally adjusted sales as spring approaches.
On the multifamily side…
Recent reports have shown flat or negative rent growth due to increased unit deliveries despite strong demand driven by single-family housing fundamentals.
However, ApartmentList’s February report showed positive signs with a month-over-month rent growth increase of .02%. But overall there was still negative yearly rent growth at -1%.
Vacancy rate currently stands at around six percent according ApartmentList analysts who also predict more vacancies as new units come online this year leading up an abundance vacant units ahead.”
But wait…
Marcus & Millichap predicts an all-time high delivery rate for multifamily units this coming year (480k). However they also anticipate construction slowdown after that point based on recent trends showing decline both annualized pace and permitting activity.
While this may lead to a short-term increase in vacancies, Marcus & Millichap analysts believe that the sector is moving past its peak construction levels.
