The housing market is exhibiting some signs of growth as we enter the spring home-buying season, but ongoing high mortgage rates may hinder housing activity.

At the national level, housing affordability increased in January compared to the previous month, according to the Housing Affordability Index from the National Association of REALTORS®. In January, the average monthly mortgage payment dropped by 2.4%, or $49, from the previous month, despite a slight 0.3% dip in the median price of single-family homes.

According to Silver City Regional Association of REALTORS® President Lynette Holguin, "the local real estate market is currently experiencing positive changes, with interest rates for loans ranging from 6 to 7%. The buying and selling of homes are taking place at a steady pace, and as a REALTOR® I have received more phone calls and inquiries in the past month than in the past five months combined.

According to online Property Research Reports (PRR) for REALTOR®s®, the List to Sold Price is at 96.8%, and the Median Sold Price is $230,500 in Grant County."

With recent inflation data coming in hotter than expected, the U.S. Federal Reserve did not lower rates at their meeting on March 20. They did, however, restate their expectation that there will be three interest rate reductions this year, as previously predicted in December. Housing experts expect that mortgage rates will stabilize at a median rate of 6% by the end of 2024. Meanwhile, prospective home buyers are hoping for the return of even lower mortgage rates.

In the absence of interest rate changes cash sales continue to drive the housing market. According to data from the NAR, in January of 2023 nearly 32% of home buyers paid cash, marking the highest percentage since 2014. Many of these cash buyers leveraged the equity from a prior home sale to make the cash purchase.

Since selling their homes would require giving up their historically low interest rates, many homeowners who are mortgage-free or locked in at low rates are choosing to stay put. This is producing a lack of inventory across the nation causing demand to outpace supply. Currently in the Silver City multiple listing service there are 124 residential homes for sale in the region, with only 76 listed for sale in the Silver City area, according to Kim Clark, Association Executive of SCRAR.

This week the National Association of Home Builders released new data that shows promise for inventory woes. Total housing starts jumped in February to an annual rate of 1.521 million, 5.9% higher than a year ago. Single-family home starts soared 11.6% to an annual rate of 1.129 million. Building permits were up modestly last month.

Much of this data points to positive signs in the housing market in 2024. However, there are still high mortgage rates, a shortage of affordable housing, and a shortage of inventory, which could make it more difficult for buyers to purchase a home this year.

Kim Clark | Silver City Regional Association of REALTORS | 575-538-2665