There are promising signs of a stronger housing market this year than at the same time last year.
According to a recent report from the California Association of Realtors (CAR), both closed and pending sales appear to have risen again in February.
The number of days on market, and the percentage of sellers discounting to attract buyers are both falling, and the percentage of homes closing above list price is rising, according to the report.
Mortgage rates have also slightly dipped again.
Following signs from the Fed that rate cuts may not come until the second half of the year, 10-year treasury rates are falling. They were back to 4.13% last week, following a rise to 4.3% two weeks ago.
This is the second week in a row where Treasury rates declined slightly.
In addition, job openings fell slightly in February, and new employment data could affect wage growth, all of which the market seems to anticipate.
Wednesday’s Fed inflation report will help markets predict when the Fed might lower rates and by how much, the report added.
A resurgence in inflation could lower expectations for a rate cut and drive treasuries slightly higher, the report also noted.
At the same time, steady improvements in inflation could help the 10-year trend drop below 4% on the assumption that the Fed will cut rates sooner than later. Mortgage rates have been following suit, said the report, and average quotes have very recently dipped to 6.87%.
Pending sales continue to rise, with February being the third straight rise, said the CAR report.
The number of homes entering escrow last month increased by 8.2% compared with February 2023. California has also begun to see a slight increase in new inventory hitting the market, said CAR.
The number of homes sold statewide in January jumped 14.4 compared to the previous month of December, marking the highest level of activity in six months, according to an additional report by CAR.
“It’s encouraging to see California’s housing market kick off the year with positive sales growth,” said CAR President Melanie Barker, who added, “the lending environment is expected to be more favorable in 2024, so the market should see more pent-up demand translate into sales.”
Adding to the overall positive picture, said the CAR report, Home Purchase Sentiment figures released by Fannie Mae rose again in February 2024, with the index inching up 2.1 points to 72.8.
Also, according to the CAR report, more respondents to the sentiment survey felt more positive last month about home buying and selling, with the number of those who said it was “a good time to buy” rising 2 percentage points to 19% and those who said it was “a good time to sell” leaping 5 percentage points to 65%.
Over a third of respondents (35%) continued to believe that mortgages will decline in the next 12 months, a sharp increase from the share of 15% recorded 12 months ago.
The share of consumers who said it would be easy to get a home mortgage today improved from 4 percentage points to 46% in February, said the CAR report. Consumers were also slightly more optimistic last month about the economy, as 31% believed that the economy was on the right track, a moderate improvement from January, when the number was 25%.
