Deep Dive Into Local Market Data

The Big Story

Quick Take:
  • The National Association of Realtors® (NAR) settled a major lawsuit in March. It’s still too early to tell exactly how real estate will be affected, since the courts have yet to approve the settlement, but we’ll shed some light on what’s happening.
  • Mortgage rates fell slightly in March, closing the month at 6.79%. The Fed continued its wait-and-see approach to rate cuts during the March meeting, holding the federal funds rate steady and stating that they need more data indicating that the economy is continuing to improve.
  • Sales increased 9.5% month over month, and inventory rose 5.9%. More homes are coming to the market and quickly translating to more sales. New listings rose by 15% month over month, which only benefits the market.Note: You can find the charts & graphs for the Big Story below.

Near-term refinancing could relieve current rate woes

On March 6, 2024, Federal Reserve Chair Jerome Powell delivered remarks before the House Financial Services Committee regarding the Fed’s stance on inflation and the likelihood of rate cuts. In short, rate cuts are coming soon but not too soon. Essentially, the Fed is waiting for more positive inflation data before cutting rates, and cuts will almost certainly come sometime this year. At the start of the year, financial markets were speculating that rate cuts would begin after the Fed’s March meeting, but, with the information from Mr. Powell, we are now expecting rate reductions after the June or July Fed meetings. The Feds strategy makes sense: the benefits of waiting for more information outweigh the potentially negative effects of cutting rates in March only to raise them again in June. The Fed’s dual mandate aims for stable prices (inflation ~2%) and low unemployment. Employment is solid with unemployment at 3.9%, and the February jobs report showed that the labor market added 275,000 non-farm payroll jobs, considerably beating analyst expectations of 200,000. Unless something truly disastrous happens in the labor market, inflation is the primary factor in the Fed’s decision making in the first half of 2024.
 
The good news for the housing market is that potential home buyers and sellers have a much clearer picture of where rates will go in the next 12 months. The bad news is that rates likely won’t meaningfully decrease until after what is traditionally the most active time in the housing market (March to August). However, because we know there is a high probability of mortgage rates declining this year, home buyers could easily decide to buy now and refinance in the near future. The average 30-year mortgage rate has been above 6% since September 2022, and the housing market has been slower, especially on the selling side, which of course feeds into the buying side, since buyers can’t purchase what's not for sale. The rate-induced market slowdown has given potential buyers more time for a down payment. Many buyers were priced out of the market in the second half of 2022 but have now had over a year to save more money for a down payment. Buyers and sellers are also a little more accustomed to higher rates so aren’t as emotionally tied to the sub-3% mortgage rates seen in 2020 and 2021. We expect the market to heat up more than it did last year because of these factors and aren't so worried about buyer demand because it’s high relative to supply so more sellers could definitely come to the market.
 
Different regions and individual houses vary from the broad national trends, so we’ve included a Local Lowdown below to provide you with in-depth coverage for your area. In general, higher priced regions (the West and Northeast) have been hit harder by mortgage rate hikes than less expensive markets (the South and Midwest) because of the absolute dollar cost of the rate hikes and limited ability to build new homes. As always, we will continue to monitor the housing and economic markets to best guide you in buying or selling your home.
 
Note: You can find the charts & graphs for the Big Story at the end of the following section.

The Local Lowdown — Orange County

Quick Take:
  • Active listings fell for single-family homes month over month but hit new two-year highs for condos. The market is also seeing more new listings and increasing sales, which are both good for a healthier market.
  • Months of Supply Inventory fell across markets over the past two months. Currently, for single-family homes, MSI indicates a sellers’ market in Orange.
Note: You can find the charts/graphs for the Local Lowdown at the end of this section.