The Housing Market Just ‘Burst’—in the Very Best Way Imaginable

Home prices remain stable

This jolt to home inventory has done little so far to move the needle in list prices, which have long been stuck in the same basic groove.

Last December saw median home prices at $400,000, and this December wasn’t all that different, with prices hitting a cool $410,000, growing 1.2% compared with the same period a year ago.

And while prices did fall by $10,000 from November to December, that decrease is in keeping with seasonal patterns.

“Some softening in home prices” is in the cards for 2024, Hale says, but don’t expect a large decline while mortgage rates remain high.

“I don’t think we’re going to see a big break in prices, since the broader trend facing the housing market continues to be not enough supply relative to demand,” says Hale.

Homebuyers’ affordability issues continue

Buyers welcoming friendlier mortgage rates and more homes to choose from still have to contend with some tough bottom-line issues.

December’s homebuyers had to shell out way more cash per month than buyers from the same period last year (when mortgage rates were even lower). Indeed, the cost of financing 80% of the typical home rose by 6.1% in December compared with the year prior, which translates to an extra $123 per month.

Add up this math, and the equation equals affordability challenges.

“This increased the required household income to purchase the median-priced home by $4,900, to $85,664, before accounting for the cost of tax and insurance,” explains Jones.

The surprising pace of home sales

Buyers shopping for homes along with their Christmas presents wasted no time sealing the deal.

In December, homes spent 61 days on the market, which is four fewer days than last year—and a whopping two weeks shorter than the average from 2017 to 2019 before the COVID-19 pandemic.

Buyers were even more eager in the 50 biggest U.S. metros, where homes flew off the market in an average of 55 days.

Thrifty homebuyers looking to buy in a large metro should head to the South, a region with the lowest listing price growth rate at 2.3%. (For comparison, median home prices jumped 8.4% in the Northeast.) The South was also the only region that saw noteworthy yearly inventory growth—7.7% in December.