Yesterday’s report from the National Association of Realtors (NAR) confirmed a speculation many economists predicted. As rates have crept down, the prices of single-family homes have maintained an upward trajectory. In Q4 2023, prices of single family homes rose in more than 85% of the markets tracked by the NAR. 34 of those markets even saw double-digit price gains. The national median price for an existing single-family home sits at $391,700, a 3.5% increase from one year ago.

Limited housing inventory remains the cause for this trend. New construction activity will be a key factor to increase the number of available homes. However, builders are facing challenges with material and labor costs. The next National Association of Home Builders (NAHM) Housing Market Index report on February 15 will provide insight into builders’ prediction for the number of future single-family home sales.

It is important to note, if mortgage rates drop, this will increase affordability across the board and may lead to an influx of new homebuyers entering the market. Simply put, this increased demand could outpace supply and continue to place upward pressure on home prices. Key economic indicators like the upcoming January inflation report on February 13th and the Fed's meeting minutes on February 22nd could impact mortgage rates and buyer sentiment.

Stay tuned to our Market Updates as we keep you informed about these developments.