Home Prices Hit Record Highs in April 2024: Trends & Predictions

The housing market in the United States is witnessing unprecedented shifts, with the median home price soaring to an all-time high of $434,000 in April, according to a recent report by Redfin. Despite the slowdown in the housing market compared to the frenzied activity during the pandemic, prices continue their upward trajectory due to a fundamental imbalance between supply and demand.

The supply side of the equation is notably constrained, with insufficient inventory to meet the burgeoning demand from eager homebuyers. In April, new listings saw a modest increase of 1.7% from the previous month on a seasonally adjusted basis, accompanied by a notable 10.8% year-over-year rise.

However, this surge still falls short, lingering approximately 20% below pre-pandemic levels, primarily because many homeowners are reluctant to sell, buoyed by the allure of historically low mortgage rates secured during the pandemic.

It’s essential to recognize the context of last April, when new listings plunged to record lows, setting the stage for the significant year-over-year increase observed presently.

Here are some key takeaways:

The median sale price increased by 14.0% year-over-year to $433,558.
Homes sales have slightly decreased by 1.4% year-over-year.
There are 7.5% more active listings compared to last year.
Months of supply is at 2.3 which is a seller’s market.
Homes are selling faster compared to last year as evident by median days on market being 35 days.
Share of homes with price drops have increased by 5.6 percentage points year-over-year which indicates a shift in buyer-seller leverage.
Average sale-to-list price ratio is still at a high of 99.7%.
Share of homes that went under contract within two weeks has decreased by 3 percentage points year-over-year.

Impact on Home Sales and Affordability

While new listings show signs of improvement, home sales experienced marginal fluctuations, with a 0.2% month-over-month change in April on a seasonally adjusted basis, coupled with a 1.4% decline from the previous year.

Homebuyers find themselves grappling with the dual challenge of soaring prices and elevated mortgage rates. The average 30-year-fixed mortgage rate climbed to 6.99% in April, a stark contrast from the historic lows of 2.65% observed during the pandemic era.

However, there is a glimmer of hope on the horizon for prospective buyers. Recent indicators hint at a potential shift, with mortgage rates showing a slight decline in response to the latest inflation report. This development suggests the Federal Reserve may entertain the prospect of interest rate cuts in the coming months—a possibility that was previously deemed unlikely.

Housing Supply and Pricing Strategies

Despite the historically low housing supply, April witnessed a surge in active listings, reaching levels unseen since December 2020. This increase, albeit modest, represents a 0.3% uptick from the previous month and a 7.5% rise from the previous year on a seasonally adjusted basis.

Notably, a significant portion of homes lingered on the market, contributing to the overall inventory. Nearly 43.9% of homes that went under contract in April did so within two weeks of listing, indicating a shift in market dynamics compared to the previous year.

However, the rise in inventory hasn’t translated into reduced pricing pressures uniformly across all markets. Approximately 17.6% of homes for sale in April experienced price cuts—a substantial increase from the previous year. This trend underscores the growing willingness among sellers to negotiate, with some offering concessions such as mortgage-rate buydowns to entice hesitant buyers.

Regional Disparities and Seller Optimism

The housing market’s performance varies across regions, with some areas witnessing more pronounced cooling effects than others. For instance, markets like Las Vegas, once bustling with activity, are now characterized by increased negotiation flexibility and extended listing durations for properties priced above market value.

In contrast, markets like San Jose, CA, are experiencing heightened competition, with a staggering 75.8% of homes selling above their asking price in April. This trend underscores the regional nuances shaping the current real estate landscape.

Redfin’s recent survey of its agents reveals a prevailing sentiment of optimism among sellers, with a majority anticipating a market favorable to their interests in 2024. This sentiment stems from the record-high prices homes are fetching, underscoring the ongoing demand-supply dynamics influencing market behavior.

Metro-Level Highlights: April 2024

Examining the nuances of the housing market at the metro level provides invaluable insights into regional trends and dynamics shaping real estate landscapes across the United States. In April 2024, Redfin’s comprehensive analysis of 85 U.S. metro areas with populations exceeding 750,000 revealed a mosaic of contrasting performances, characterized by notable shifts in key metrics.

Price Trends

Top Performers: Median sale prices experienced remarkable growth in select metros, with Buffalo, NY leading the pack with a staggering 24.3% year-over-year increase. Other notable gainers include Anaheim, CA (22.8%) and Rochester (15%).
Declining Markets: Conversely, only five metros witnessed declines in median sale prices, with San Antonio (-1.6%), Memphis, TN (-0.7%), and Birmingham, AL (-0.7%) experiencing the most significant contractions.

New Listings Dynamics

Growth Leaders: San Jose emerged as the frontrunner in new listings growth, soaring by 46.9% year-over-year. Noteworthy increases were also observed in Tacoma, WA (38.3%) and Oakland (38%).
Exceptional Decline: Among the metros analyzed, Greensboro, NC stood out as the sole market experiencing a decline in new listings, witnessing a 1.6% decrease compared to the previous year.

Active Listings Fluctuations

Rising Markets: Cape Coral, FL, emerged as the leader in active listings growth, surging by 50.6% year-over-year, closely followed by North Port (49.1%) and Fort Lauderdale, FL (42.2%).
Declining Trends: Conversely, markets such as Raleigh, NC (-12.3%), New Brunswick, NJ (-8.7%), and Lake County, IL (-7.4%) experienced notable declines in active listings.

Closed Home Sales

Growth Hotspots: San Jose led the pack in closed home sales growth, surging by 38.2% year-over-year, followed by San Francisco (30.4%) and Stockton, CA (23.2%).
Declining Markets: Conversely, markets like Fresno, CA (-3.5%), Jacksonville, FL (-3%), and Albany, NY (-2.6%) witnessed declines in closed home sales.

Competitive Dynamics and Market Activity

Sold Above List Price: The competitive landscape varied across metros, with San Jose leading with 75.8% of homes sold above their final list price, while markets like North Port (6.8%) and West Palm Beach, FL (7.1%) saw comparatively lower shares.
Rapid Off-Market Activity: Rochester emerged as the frontrunner in swift market activity, with 84.6% of homes going under contract within two weeks—the highest share among metros analyzed. Conversely, markets like Honolulu (7.4%), Tucson, AZ (16.6%), and Chicago (16.9%) witnessed longer durations before homes went off-market.

In summary, the report by Redfin shows that the U.S. housing market continued to see strong growth in April 2024. However, there are also some signs that the market may be starting to cool down a bit. The number of homes for sale remains below pre-pandemic levels, but sales have flattened out in recent months. Additionally, mortgage rates are beginning to rise, which could put a damper on affordability for some buyers.

Despite these signs, overall conditions still favor sellers. Homes are selling more slowly than they were during the height of the pandemic buying frenzy, but they are still going under contract relatively quickly. In some areas, buyers are even able to negotiate the final sale price down from the asking price.