Pricing Trends
While prices have largely remained stable, there are signs of softening. The average sold price saw a minor decline of 0.9% YoY, now at $573,000. However, the median sold price dropped 5.0% to $435,000, reflecting affordability concerns for buyers. Additionally, the price per square foot fell by 2.9%, signaling a cooling market overall.
From Redfin’s August 2024 update, we’re seeing similar pricing trends across many metro areas, with Austin reflecting these broader shifts. Redfin reports that national median home prices are down 2.7% YoY, mirroring Austin’s local trends. Additionally, the national homebuying demand has cooled, with fewer bidding wars compared to last year, providing more room for negotiation.
Market Dynamics
Homes are taking longer to sell, with average days on market up 12.9%, reaching 70 days. This slowdown in demand is also reflected in the increased months of inventory, now at 4.6 months, up 21.1% from last year. This indicates that buyers currently have more negotiating power, while sellers are dealing with increased competition.
According to Redfin’s data, national home inventory is similarly on the rise, climbing 10.2% YoY in August. This uptick in inventory is partly due to high mortgage rates, which are causing some sellers to hold off on listing their homes, leading to fewer new listings.
Economic Indicators
In addition to a slight decrease in job postings on Indeed.com, Austin’s job market is seeing mixed trends. According to recent data, Austin’s unemployment rate rose slightly to 3.8% in June 2024, which is still lower than the state average of 4.5% and the national average of 4.3%. Despite this uptick, the region has experienced an annual job growth rate of 1.7%, adding 22,500 jobs since June 2023. The fastest-growing sectors include mining, logging, and construction (up 4.7%) and private education and health services (up 3.8%).
Austin continues to see job gains in sectors like leisure and hospitality and professional and business services, though some sectors, like information and professional services, have seen slight declines over the past year. Overall, this job growth signals resilience, though the slight rise in unemployment and sector-specific slowdowns highlight challenges for certain industries.
Federal Reserve & Interest Rate Outlook
Mortgage rates remain high, though they have decreased slightly to around the 6.5% range. These factors continue to impact affordability and overall buyer interest.
Redfin’s August market update points out that national mortgage rates are at a 20-year high, hovering around the same 6.5% mark. These high rates continue to slow down home purchases across the country as buyers weigh the impact of larger monthly payments.
Looking ahead, there is growing anticipation of a rate cut from the Federal Reserve in September 2024. This is expected to kick off a series of rate reductions that may continue into 2025. For buyers, this could mean lower mortgage rates, increasing affordability and potentially boosting the housing market.
Currently, 30-year fixed mortgage rates are averaging around 6.27%, and 15-year fixed rates are at 5.65%, according to Mortgage News Daily. While these figures represent a slight reduction from recent highs, they are still notably higher than pre-pandemic levels. Jumbo loans and adjustable-rate mortgages are also trending at elevated levels, with jumbo loans hovering at 6.49%.
If the Fed proceeds with the expected rate cut, mortgage rates could gradually decline further, providing buyers with improved financing options.
In its August 2024 report, Redfin also pointed to downward pressure on mortgage rates due to market anticipation of this upcoming rate cut. Borrowers should watch closely, as even slight reductions in rates could significantly affect affordability.
This easing of monetary policy may also spur job growth in key sectors like tech and construction, which are crucial to Austin’s economy. For buyers, now could be the time to start exploring opportunities, as rates may decrease further in the coming months. However, sellers should remain prepared for a slower market as buyers wait for more favorable rates.
Advice for Buyers
In 2024, buyers find themselves with more opportunities thanks to increased inventory and slower sales. If you’re able to navigate today’s mortgage rates, you’ll likely have greater negotiating power. And with interest rates potentially decreasing in the coming months, now could be a good time to start your search while inventory remains high.
Keep connected with us through our Buyer Resource Center.
Advice for Sellers
For sellers, the market is shifting, and pricing your property competitively is more important than ever. With rising inventory and homes sitting longer on the market, it’s crucial to be realistic about the timeline and be prepared for buyers to request concessions. Though homes are still selling, patience and a strategic approach to pricing will be key to success.
We also encourage you to consider a two-pronged approach. We have the ability to list your home for sale and for lease to explore both options. Using Compass Private Exclusive, we can test this approach without racking up days on the market in a public listing.
An informed client is a great partner in the real estate home buying or home selling process. We want to share with you insights on the market so that you are better informed. We are here for buyers and sellers to make sense of the often tough market. Don’t go it alone. Let’s talk today!
