Before we begin to look forward at what the market conditions might be post-election, we’re pausing to dive into the data we have at hand and the trends we can identify right now. The recently released S&P/Case-Shiller Home Price Index report (as of July 2024) reveals a market that seems to be holding its breath in anticipation for a potential shift.
Keep in mind that the report looks back two months, and the slight month-over-month declines likely align with the summer distractions, with many potential buyers and sellers preoccupied with vacations, and high mortgage interest rates continuing to be a barrier. Some would-be buyers have been waiting on the Fed Reserve rate drops which happened this month, trimming 50-bps.
All said, housing in the U.S. is seeing all-time highs, and we all know supply is limited with a drought of new construction given the inflationary costs and steep financing stacks. Considering inflation is now largely under control and there are more rate cuts ahead, we can expect more buyer activity and upward pressure on pricing.
This supports our earlier call this spring when we believed the inflection point in the market occurred and encouraged buyers to jump in to “buy then refi,” believing the price escalation would eclipse any temporary impact of paying higher mortgage rates. As it is, Seattle Metro Area has sustained a 50-bps increase in home prices monthly.
The above chart shows the index levels for the U.S. National, 10-City, and 20-City Composite Indices going back to 1987.