Residential Real Estate Market Snapshot

Overview

The residential real estate market exhibited signs of improvement in February 2024, with most housing indicators suggesting a promising outlook for the remainder of the year.

Existing-home sales experienced the largest monthly increase since February 2023, despite the overall trajectory of decreased sales. In addition, while registering year-over-year decreases in all U.S. regions, the Pending Home Sales Index (PHS), a leading indicator of housing contract activity, also grew in February. The growing supply of homes is stimulating market activity, while demand remains strong, driven by solid job growth. However, despite this positive movement, home sales continue to be lower compared to a year ago. These fluctuations reflect the housing market's response to the broader economic environment, including factors such as mortgage rates and overall economic conditions.

From a broad economic perspective, although the short-term interest rate wasn't changed in the Federal Reserve's meeting, the 10-year Treasury yield increased further during the second month of the year. Nevertheless, with multiple rate cuts to follow by the Fed, NAR predicts that the 10-year Treasury Yield will lower throughout the year, which will present favorable conditions for borrowers. In addition, inflation may not have yet reached the Federal Reserve's goal of 2%, but it's considerably lower than the previous year.

February's notable increase in employment is an important indicator to watch, as job additions build up the long-term demand for housing.

In terms of housing supply, new listings marked the largest annual gain since 2021 and the U.S. Census Bureau reported increases in both housing starts and building permits.

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