New: 🧠 Market Minds Issue #049

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Sales Heat Up as Mortgage Rates Cool Down

Pending Home Sales: Momentum Builds

Pending home sales reached 362,000 units nationwide, a slight 1% increase over the past week, continuing a trend from earlier in September. Compare this to last year when home sales were falling by 1% per week, and the picture looks more optimistic. We’re now seeing 6% more homes in contract than at this time last year, with new pending contracts up by 11% year over year. These numbers suggest that the lowered mortgage rates are prompting more buyers to reenter the market—something we expect to continue through Q4.

Inventory Is Still Rising—But Not for Long?

Despite the increase in sales, inventory remains on an upward trajectory. Hurricane Helene has temporarily disrupted the market in regions like Florida and Tennessee, but overall, we could see fewer listings in the weeks to come as sellers react to improving rates. More homes for sale ultimately means more opportunities for sales, but agents should monitor for potential shifts due to natural disasters and changing seller sentiment.

Key Insight: If you’re working in investor-heavy markets like Florida or Texas, you may notice an influx of underperforming assets hitting the market. Keep an eye on this as an opportunity to pick up properties before the competition heats up again.

Prices Holding Steady: Don't Expect a Big Correction

Home prices have stayed remarkably resilient, ticking up slightly by 2-3% this year. Even with lower demand earlier in the year, there’s no evidence of major price drops on the horizon. And as mortgage payments are now about 14% lower than they were at peak rates in May, buyers are finding homes more affordable without prices actually falling. The median home price sits at $443,000, with newly pending contracts seeing prices around $390,000—a slight increase for the third week in a row.

Pro Tip for Investors: Waiting for a significant price correction may not be the winning strategy. With rates dropping, buyers are returning, but prices are holding firm. Now may be the time to lock in a deal before prices firm up even further in spring 2025.

Price Reductions: The Hidden Signal for 2025

The percentage of homes with price reductions has been hovering around 40%, lower than in 2022. If this trend continues and finishes the year under 36.3%, we could be setting up for stronger price appreciation in 2025. This metric is a leading indicator—fewer price cuts this fall might mean home values will rise more than expected next year.

The current market represents a delicate balance between increasing activity and stable pricing. Investors should see this as an opportunity to buy in before broader shifts occur in the spring. Either way, keeping a close eye on these subtle but significant market changes is critical to staying ahead.

The Shifting Motivations Behind Today’s Sellers

Life Events Are Driving the Seller's Market

Zillow’s latest report shows that major life events are the key motivator for 78% of homeowners selling their property. The most common reasons? A change in household size (51%) and job relocation (37%). With many sellers looking for more space or a new layout, agents need to focus on life-stage changes to tailor their approach.

Location, Space, and Layout: What Sellers Want Next

Nearly half of all sellers (48%) are motivated by a desire for a different location. Other factors include homes being too small (22%) or sellers wanting a new layout (22%). As these priorities shift, understanding your client’s next step becomes essential. For agents, this is a call to focus on targeting the right buyer needs—space, layout, or a fresh start in a new neighborhood.

The Rise of Renters-Turned-Sellers: Know the Trends

A growing 66% of sellers considered renting their home before listing it, with younger sellers being more open to this option. This is a marked increase from 2021 (47%) and suggests that sellers are weighing all options before committing to sell. Investors should take note: this uptick in rental consideration is a potential opportunity to pick up properties that were close to entering the rental market.

Selling Timelines: Patience Is the New Normal

Nearly half of sellers (47%) describe their selling timeline as medium urgency, while 35% felt no rush at all. Most sellers take about three to four months to decide to list, though older sellers (60+) take even longer, with 34% considering for over six months. For agents, this means understanding that patience is part of the process for many sellers, but so is providing timely information that helps them feel ready to act.

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Your guide can look something like this:

Fall Home Maintenance Checklist:

• Inspect the roof for any damage (repair if necessary)

• Check weather stripping around doors and caulking around windows

• Change air filters

• Clean chimney

• Test smoke detectors

• Clean gutters and windows

• Inspect/service furnace

• Aerate and fertilize lawn

• Trim trees to prevent storm damage

• Disconnect garden hoses

• Store/cover outdoor furniture

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TL;DR (Too Long; Didn’t Read)

Pending home sales have seen a slight 1% increase this past week, with 6% more homes in contract compared to last year, signaling positive momentum as mortgage rates drop. Inventory is still rising, but disruptions like Hurricane Helene could reduce listings soon. Home prices remain steady, increasing 2-3% this year, and with mortgage payments about 14% lower than peak rates, buyers are finding homes more affordable. Investors should keep in mind that fewer price reductions could lead to stronger price appreciation in 2025. Sellers are primarily motivated by life events, with nearly half seeking a new location or layout.

Have a great weekend - we’ll see you next Saturday.

Cheers 🍻

-Market Minds Team