Brief excerpt:
Earlier I posted some questions on my blog for next year: Ten Economic Questions for 2024. Some of these questions concern real estate (inventory, house prices, housing starts, new home sales), and I’ll post thoughts on those in the newsletter (others like GDP and employment will be on my blog).There is much more in the article.
I'm adding some thoughts, and maybe some predictions for each question.
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9) House Prices: It appears house prices - as measured by the national repeat sales index (Case-Shiller, FHFA, and Freddie Mac) - will be up mid-single digits in 2023. What will happen with house prices in 2024?
The first question I’m always asked is “What will happen with house prices?” No one has a crystal ball, and it depends on supply and demand.
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This graph below shows existing home months-of-supply, inverted, from the National Association of Realtors® (NAR) vs. the seasonally adjusted month-to-month price change in the Case-Shiller National Index (both since January 1999 through October 2023). Note that the months-of-supply is not seasonally adjusted.
The recent months are in black (Oct 2023 in Blue) showing the impact of the initial surge in inventory in 2022 and prices fell for seven months with low levels of inventory!
The last several months are following the historic pattern.
In October, the months-of-supply was at 3.6 months, and the Case-Shiller National Index (SA) increased 0.65% month-over-month.
I don’t expect inventory to reach 2019 levels but based on the recent increase in inventory maybe more than half the gap between 2019 and 2023 levels will close in 2024. If existing home sales remain sluggish, we could see months-of-supply back to 2017 - 2019 levels.
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