Headlines

What’s new in the world of Real Estate

• New construction is slowing

• Existing-home sales fall

• The hottest rental markets

• Prices rising at a slower pace

Plus: Where to buy a beach house, Oregon farmland values, banks bailing on CRE, and more.

Listing of the week: The “Ziggurat” building in Southern California.

Performance

_{as of market close on June 24}

Partner

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Market Updates

The rate of new construction is down significantly in the past year. Overall housing starts fell by 5.5% in May and are down 19.3% year-over-year, while building permits are down 3.8% monthly and 9.5% year-over-year. Meanwhile, homebuilder sentiment is at its lowest level since December 2023, as the National Association of Home Builders/Wells Fargo Housing Market Index fell to 43. Reasons for the decline include high interest rates, increased construction costs and fewer prospective buyers. These factors suggest a future decline in supply, although current inventory levels are still increasing.

Existing-home sales continued to decline. According to a report from the National Association of Realtors (NAR), total sales were down 0.7% in May and 2.8% year-over-year. However, the monthly decline was entirely limited to the South, as sales in the Northeast, Midwest and West stayed flat. Total inventory is up 6.7% from April, and 18.5% year-over-year, an indication that either buyer demand is down or prices remain too high to generate sales. NAR Chief Economist Lawrence Yun predicts that “more inventory will help boost home sales and tame home price gains in the upcoming months.”

Miami remains the #1 most competitive rental market in the country. This ranking is based on RentCafe’s Rental Competitive Index (RCI), which looks at vacancy rates, days an apartment stays vacant, prospective renters, renewal rates, and the number of new apartments completed. Following Miami were the Chicago suburbs and North New Jersey, which are suburbs of New York City. This is a notable trend as potential homeowners who may be priced out of buying are now choosing to rent in the suburbs. The Twin Cities, Memphis and New York City ranked as the top three trending markets, seeing the biggest increases in RCI since last year. The top three small rental markets were Lehigh Valley, PA, Madison, WI and Providence, RI - notably, all college towns. Rental trends are important for potential investors to monitor when deciding which locations to target.

The rate of home price appreciation is slowing. While home prices are up 7.2% year-over-year, according to Redfin, the 0.3% gain in May represented the lowest gain since January 2023. The report points to the rise in supply and high mortgage rates as the main reasons for the slowing pace, but if mortgage rates fall in the second half the year, the rate of appreciation could start increasing again.