Latest data on prices and mortgage costs suggests buyers need to move quickly before the Holidays if they want to find a great deal.
Values look set to rebound as the Federal Reserve moves toward a lower interest rate environment.
The US is on track to sell 4 million properties this year with the sale of existing homes remaining stable.
The median price for an American home now stands at $422,600, a 2% increase compared with 12 months ago. That represents the 26th successive month that prices have edged higher. This time last year, the median price was $414,200.
There has also been a 1.8% increase in the sale of existing homes over the same period.
A third piece of data suggesting the market is edging toward a more equitable state between seller and buyer is a 1.3% decrease in the number of homes for sale.
As any real estate follower knows, the dynamic between supply and demand is critical to value trends.
This latest data suggests buyers are slowly losing their favorable negotiation position – a trend that should spark previously reluctant first-time buyers, investors and upsizers into action.
However, the sale of affordable homes is constrained by the lack of inventory, which isn’t good news for first-time buyers.
The exception is the Midwest. It’s proving to be the best-performing region in terms of deal numbers because its prices are 22% below the national average.
Looking specifically at the 12-month performance of single-family homes, we have seen a 2.5% increase in sales (3.63 million). The median price is up 1.9% to $427,800 compared with August 2024.
Condominiums and co-op deals are not so strong largely because of strong supply. Transaction sizes are down 0.6% compared with 12 months ago with an average value of $366,800.
NAR Chief Economist Lawrence Yun interpreted the latest data, saying: “Home sales have been sluggish over the past few years due to elevated mortgage rates and limited inventory.
“However, mortgage rates are declining and more inventory is coming to the market, which should boost sales in the coming months.”
Mr Yun said “record-high housing wealth” and high stock levels would help owners trade up and benefit the upper end of the market.
Here are some other highlights of the latest NAR report:
Two-speed market – Month-over-month sales increased in the Midwest and West, and fell in the Northeast and South. Year-over-year, sales rose in the Midwest and South, and fell in the Northeast and West.
Time on market – 31 days (not including settlement), up from 26 days in August, 2024.
First-time buyers – 28%, up from 26%.
Other buyers – 21% were investors or second-home buyers, up from 19%.
Cash is king – 28% were cash sales, up from 26%.
Distress – 2% of sales were distressed, up from 1%.
Mortgage rate – 6.3% for the average 30-year fixed-rate mortgage, according to Freddie Mac data.