Inventory Shrinks as Mortgage Rates Climb

The New York housing market is experiencing a significant contraction in inventory, coupled with rising mortgage rates, creating an increasingly competitive environment for both buyers and sellers. According to the latest housing report from the New York State Association of REALTORS®, November marked a pivotal month with inventory levels dropping to their lowest since March, while median sales prices continued their upward climb.

Declining Housing Inventory

The number of available homes for sale across New York State fell sharply, decreasing by 11.3% year-over-year. November 2024 saw only 26,152 homes on the market compared to 29,499 the same time last year. This dip brings the inventory levels close to those seen in March, when just 25,756 properties were available.

For buyers, this tightening inventory means limited options and heightened competition. For sellers, fewer properties on the market could result in quicker sales and stronger negotiating positions.

Mortgage Rates Edge Higher

Interest rates are once again putting pressure on the market. The average 30-year fixed-rate mortgage climbed to 6.81% in November, up from 6.43% in October. While still below the 7.44% rates seen in November 2023, this increase adds financial strain for buyers, particularly first-time homebuyers navigating the rising costs of homeownership.

Buyers should work closely with lenders to secure pre-approvals and lock in rates where possible, while sellers may need to consider how higher rates impact buyer purchasing power.

Sales Activity: A Mixed Picture

Sales data reflects a mixed bag for the market:

• Closed Sales: Dropped 4.6%, from 9,079 units in November 2023 to 8,660 in November 2024.
• Pending Sales: Rose 3.6%, reaching 7,874 homes compared to 7,602 in the previous year.
• New Listings: Fell 8.6%, from 9,252 units in 2023 to 8,455 last month.

These trends indicate that while demand remains strong, the shrinking inventory and rising interest rates are influencing buyer and seller behaviors. Pending sales growth suggests that motivated buyers are still in the market, even as closed sales decline due to tighter conditions.

Rising Median Sales Prices

Median sales prices climbed 9.5% year-over-year, jumping from $370,000 in November 2023 to $405,000 last month. This reflects the ongoing demand for housing despite affordability challenges. Sellers continue to benefit from appreciating home values, but buyers may need to adjust their budgets or broaden their search areas to accommodate the higher prices.

Realtor Insights

For realtors, navigating this market requires strategic planning and clear communication with clients:

• For Buyers: Educate clients about the importance of pre-approval, rate locks, and flexibility in a competitive landscape. Highlight opportunities in less saturated areas or properties requiring some improvements.
• For Sellers: Emphasize the benefits of listing during a period of reduced inventory to attract motivated buyers and potentially achieve top dollar.
• For Investors: Rising prices and tight inventory may present opportunities for long-term appreciation, but careful analysis of financing options is crucial given the rate environment.

Looking Ahead

As 2024 concludes, the New York housing market remains dynamic and challenging. Whether you’re buying, selling, or investing, staying informed and working with experienced real estate professionals will be key to navigating this ever-evolving market.

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Disclaimer: This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.