Home Prices Turn Negative! [September 2024 Market Update]

September Market Stats

September Key Takeaways

🔻 - September was the first month this year where we saw a year-over-year decline in both the average and median sales price!

😳 - Mortgage rates dipped considerably in September but low rates didn't last long – they're UP again in October.

🤝 - Buyer demand came back as rates and prices dropped – the number of homes that went under contract in September 2024 was 17% more than in September 2023.

🏠 - Months of supply seems to have plateaued, meaning prices will likely remain fairly stable through the end of the year.

September In-Depth Analysis

Supply-Side:

I'm starting to feel like a broken record. The supply side of the market has been extremely consistent throughout the year. The number of new listings added each month is in line with 2022 and 2023.

September 2024 saw 1,161 new listings added across Davidson County. As we head into winter, we should start to see this number decline with seasonal trends (See chart below).

The total number of listings added since the beginning of the year also remains consistent (See chart below).

At the current pace, we should end the year with about 14,000 listings added since January.

So, the supply-side of the market remains pretty boring. What about demand?

Total inventory, which includes homes that are coming soon, active, or under contract, continued to grow (See chart below).

Although total inventory is up 13% compared to this time last year, we have yet to see this result in a major price correction like what's taken place in the Austin real estate market.

To see home prices in Nashville really start to decline, we would likely need to see total inventory up 20% or even 25% given the current levels of demand.

Demand-Side:

Something very interesting happened on the demand side in September – the number of homes that went under contract increased by over 17% compared to the previous year (See chart below).

It's as if a bunch of buyers who were sitting on the sidelines came back to the market. And, this didn't just show up in the market data. Personally, I had five or six buyers call me in September to start their home search and, I had four of my listings go under contract!

What's the catalyst for this sudden resurgence of buyers? Two words – Interest Rates.

I've said for some time now that the 30-year mortgage rate needs to be below 6% to spur demand. In my opinion, it's a psychological threshold and whether or not it makes sense, prospective homebuyers are a lot more willing to make a purchase if their interest rate is 5.99% vs 6.01%.

Looking at the chart below, the number of closings in September looked pretty depressing. But, all of you smart folks who are reading this right now will know that if the "New Under Contract" data is any indication, we should see in increase in the number of closings come October.

Even if the number of closings in October outperforms, we'll still be in a demand rut compared to years past. If we keep the current pace of demand, we are likely to end the year with about 8,200 closings since January.

Supply vs Demand:

For those of you hoping for prices to go significantly up or down, I wouldn't hold your breath. The "Months of Supply", which spiked in June has plateaued and remained steady around 4.5 months.

Keep in mind, months of supply is seasonal. If 2022 and 2023 are any indication, we should see it peak in November. And, while it was unusual for it to increase so drastically this year in June, my prediction is the months of supply will close the gap in October when most of those pending sales close.

The average days on market before going under contract has remained consistent as well. In Davidson County, days on market remains in the mid-20s.

We should see this number increase slightly heading into winter.

Home Prices:

I know what you're thinking – who cares about supply and demand, YOU want to know how home prices are performing!

September was a historic month for Davidson County home prices. It was the first month in 2024 where home prices were down year-over-year. Let me say that again so it sinks in – September 2024 was the first month in 2024 where we saw prices lower than the same month in 2023.

The average sales price was down 8% compared to September 2023 and the median sales price was down just over 1% (See chart below).

Was this a one-time fluke or is this the beginning of a longer trend? If you are lucky enough to have one, feel free to ask your crystal ball.

Mortgage Rates:

Mortgage rates saw a ton of relief in September due to the market pricing in the anticipated Fed rate cuts.

Before you start jumping up and down with joy, I hate to burst your bubble but rates moved sharply higher in October :/

The average rate for a 30-year mortgage in September was 6.18% and I even had a client with excellent credit lock in a 5.25% without paying any points. I can honestly say that I haven't seen a 5.25% rate in a loooonnnnnggggg time.

As of October 11th, the average 30-year fixed rate mortgage was 6.64%.

For those of you scratching your head saying, "Didn't the Fed just cut rates, why are they higher?" Here is an excellent explainer video on how mortgage rates are actually determined (spoiler alert: they're not based on the Fed Funds Rate).

Affordability Check-In:

With home prices down slightly, and mortgage rates down significantly, September was by far the most affordable month to buy a home in 2024.

Based solely on the chart below, we are almost back to 2022 levels of affordability in Davidson County.

Here's the same analysis using a consistent $500,000 loan amount. As you can see, the monthly payment in September 2024 is only $23 more than September 2022 and $297 less than September 2023. I'll take that as a win for home affordability!

About Felix Homes

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• We're an independently owned brokerage – not a franchise which allows us to keep more of the commission we earn.
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If you have any questions about the state of the market or the home buying/selling process, please feel free to contact us at contact@felixhomes.com or 615-354-5731.