Since January 2024, prices have climbed 13.6%, reaching an all-time high in May and another in June 2024. Similarly, the monthly cost of financing has hit a record high, meaning that home affordability is at a record low.
In June, the average 30-year mortgage rate declined to 6.86%, dropping 0.17% from the 2024 high reached in April. The Fed may cut rates as early as September, but the magnitude of the cut will be small, likely 0.25% this year. Currently, we expect rates to remain between 6% and 8% for the rest of 2024.
Sales fell 0.7% month over month, while inventory rose 6.7%. The combination of rising prices and high interest rates has kept sales historically low. Since January 2023, sales have trended more horizontally, although we expect sales to decline until spring 2025.
Note: You can find the charts & graphs for the Big Story at the end of the following section.
In June, prices rose for the fifth month in a row, peaking at an all-time high in June 2024. This also marks the 12th consecutive month of year-over-year price growth. According to typical seasonality, the median price peaks in June, so we expect prices to decline starting in July. Over time, prices generally move much higher in the first half of the year than they decline in the second half; you can think of it as two steps forward and one step back, year after year. Last year, for example, prices rose 13.7% from January 2023 to June 2023, then fell 7.7% from June 2024 to January 2024, which was still a year-over-year gain of 4.9%. This year will likely look similar, although we don’t think that prices will decline as much in the second half of 2024 as they did in 2023, especially if the Fed cuts rates in the fall. Even a minor rate cut, like the expected 0.25%, could significantly affect mortgage rates, as it would signal the beginning of more and more cuts.
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. As always, we will continue to monitor the housing and economic markets to best guide you in buying or selling your home.
Median single-family home and condo prices rose meaningfully in the first half of 2024, up 14.0% and 7.2%, respectively. Year-over-year prices also appreciated 4% for single-family homes, but are down 8% for condos.
Active listings fell 17.5% month over month, along with a 19.9% decline in sales and a 43.9% drop in new listings. Housing supply is at a record low and will certainly remain tight for the rest of the year.
Months of Supply Inventory declined for single-family homes but rose for condos. In June, MSI indicated a sellers’ market for single-family homes and a buyers’ market for condos.
Note: You can find the charts/graphs for the Local Lowdown at the end of this section.
In San Francisco, home prices haven’t been largely affected by rising mortgage rates after the initial period of price correction from May 2022 to July 2022. Since July 2022, the median single-family home and condo prices have hovered around $1.5 million and $1.2 million, respectively. However, the horizontal trend may be changing. From December 2023 to June 2024, the median single-family home price rose 14%, and condo prices were up 7%. Year over year, the median price was up 4% for single-family homes and down 8% for condos. Prices are more likely to rise if more sellers come to the market. Inventory is so low that rising supply will only increase prices as buyers are better able to find the best match. More homes must come to the market to get anything close to a healthy market.
High mortgage rates soften both supply and demand, but home buyers and sellers seemed to tolerate rates above 6%. Now that rates are near 7% again, sales are slowing during the time of the year when sales tend to be at their highest. This phenomenon isn’t great for the market, but it isn’t terrible, either, as it may allow inventory to build in a massively undersupplied market.
Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). The San Francisco market tends to favor sellers, at least for single-family homes, which is reflected in its low MSI. However, we’ve seen over the past 12 months that this isn’t always the case. MSI has been volatile, moving between a buyers’ and sellers’ market throughout the year. From January to May, MSI declined significantly. In June, single-family home MSI continued to decline, while condo MSI rose sharply. Currently, the single-family home market favors sellers, and the condo market favors buyers.
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