The pace of growth in U.S. home prices is finally showing signs of a slowdown as 2024 comes to a close.
The Case-Shiller U.S. National Home Price NSA Index found that annual home price growth stood at 3.9% in September, slightly down from 4.2% in August. The trend coincides with the U.S. Federal Reserve cutting its benchmark interest rate by half a point in September, the first rate cut in four years following steady efforts to cool inflation. Further cuts are anticipated on a gradual basis in the coming years.
Despite the slowing rate of price growth, the price of a typical home in the U.S. is more than 50% higher than pre-pandemic levels, Reuters reported. The median sales price of new houses sold in October 2024 was $437,300 and the average sales price was $545,800, according to U.S. Census Bureau data.
A Reuters poll of property experts found that the Fed’s rate cut — which correlates with falling mortgage rates — likely won’t improve purchasing affordability in the new year. Tight supply of entry-level homes will continue to make home-buying cost-prohibitive for first-time buyers.
Home-buying trends in the U.S. have been skewing older. The median age of U.S. homebuyers is now 49, up from 31 in 1981.
“We continue to have these big overhangs – do you have the money for down payments? Do you have savings with the younger generation? I’d say we’re getting better, but we’re nowhere close to where we need to be,” John LaForge, head of real asset strategy at Wells Fargo Investment Institute, told Reuters.
Mortgage rates are forecast to land around an average of 6.5% next year and 6.3% in 2023, still well above the pandemic-era lows under 3%.
The trajectory of the housing market has U.S. consumers wary of the prospects of buying. The University of Michigan’s consumer sentiment survey released last month found that 82% of people polled felt it’s a bad time to buy a house. The release of the survey prompted real estate expert and Reventure CEO Nick Gerli to note that this is the “most pessimistic” homebuyers have ever been about the U.S. housing market.
Experts told Reuters that aspiring homebuyers will continue to be the hardest-hit bit the foreseeable market climate.
“With home prices expected to continue to rise and mortgage rates declining less than we previously expected after Trump’s election, conditions for first-time buyers are likely to worsen,” Grace Zwemmer, of from Oxford Economics, told the news outlet.
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