Real Estate Rundown: January’s housing market report
INDIANAPOLIS (WISH) — Interest rates are dictating the housing market once again in 2024.
Dan Brown is a Realtor with FC Tucker and joined Daybreak for our monthly Real Estate Rundown. He discussed the most recent data in the housing market report from January.
Brown says mortgage rates continue to drive this market. After peaking in October of 2023 and falling through the holidays, Brown said interest rates have leveled in the mid to high 6% range.
“January is usually our lowest month in terms of all the stats. Prices are down, everything is down because it’s January. What is different about this January is that is not the case. Prices actually ticked up a little bit. Inventory is still a problem, but this market has been driven by interest rate changes for the past year and a half, and it still is. The good news is that the interest rates are coming down. And they’ve plateaued kind of in January, but they are coming down significantly from where they were in October where they peaked,” Brown said.
The National Association of Realtors Housing Affordability Index — which measures the degree to which a typical family can afford the monthly mortgage payment on a typical home — soared to nearly 102 in December of 2023 from its low of 91 in October, when mortgage rates had hit a two-decade high of 8%, the real estate brokers’ group says.
A lack of inventory was forcing buyers to compete for what was available and, in the process, pushing up prices.
“Buyers are sellers. When they buy a house, they have to sell a house. And that means giving up an interest rate. One of the stats that we talk about is that half the mortgages in our market are under 4%. So when they’re 8%, there’s not a lot of incentive, but as those come down, more people will start to enter the market. They’ll start to look for a house, they’ll also sell a house and that opens up a house for the next person. So, inventory right now is a little challenging. We’re about 1/4 of what we’d like to see. And that’s not much, but it’s better than it was last year,” Brown said.
According to the FC Tucker report, compared to January 2023, the average home sale price for the 16-county central Indiana region increased 6.6% when compared to 2023, to $326,978. The report also says pending home sales decreased, down 4.8% when compared to this time last year.
“Coming into the spring market, I think most realtors believe that we’re going to see a very busy spring because the interest rates are going to continue to fall. They’re not going to come down fast. And I don’t think, I hope they don’t, because that will trigger another buying spree. But we can expect and all the forecasts show lower interest rates as we come through the summer. And that’s good news for everybody. That allows the sellers to still receive a lot of, a lot of equity for their home. Buyers coming in need to have a plan. It’s going to be a competitive market. A lot of people have been waiting. A lot of people kind of tapped out of the market last fall when interest rates hit unaffordable levels for them. So they’re back in it now. So we’re going to see a lot of activity,” Brown said. “Buyers need to work with their realtors and their lenders and sit down and really have a plan. Be prepared. Know what you’re looking for, have your financing in place, and work your plan.”
The key to further rate declines will come if the Fed cuts rates, which have been elevated to fight inflation but have stabilized.
