Existing home sales ended the year on a positive note, aligning with our Housing Market Tracker data, and surprisingly, home prices also firmed up late in the year. A shift in the data that started in the summer carried through to the end of the year, with positive year-over-year data beginning in October 2024.
However, it's important to remember that we're still working from historically low sales figures. When home sales dropped in the early 1980s, they fell from 4 million to 2 million, similar to today's market, which has seen significant home price growth and a major sales decline, but no price reductions. While mortgage rate drops spurred housing demand during the 1980s recession, today’s rates haven’t remained low enough to significantly boost sales yet.
Key takeaways:
Active inventory typically decreases at this time of year, but in 2024, it stayed above 1 million— a small victory.
The median sales price began showing year-over-year improvement in September, which suggests my earlier forecast of a 2.33% price increase for 2024 might be too low.
As for the idea that home prices follow sales volume and that higher mortgage rates would lead to a price crash, the data shows otherwise. Since 1942, home prices only saw a major drop between 2007-2011, when inventory was much higher and distressed sellers flooded the market. Today's market, with active inventory around 1 million and a monthly supply of 3.3 months, is far from that scenario.

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