Demand resilience supports the market, and prices rise steadily

The US existing home market in 2024 will present the following characteristics: Overall trend: Seeking progress in stability, demand resilience supports the market

• Supported by favorable factors such as demographic factors and the labor market, it is expected that US existing home sales in 2024 will continue the recovery trend in 2023, with a moderate increase of about 1% to about 5.84 million units.

• Although the Fed's pace of interest rate hikes has accelerated, housing demand remains robust, mainly reflected in the following aspects:

o The proportion of millennials and Generation Z buyers continues to increase, injecting vitality into the housing market.

o The employment level remains high and the unemployment rate is low, providing income support for residents to buy houses.

o With the relaxation of epidemic prevention and control policies, offline house viewing and transaction activities are gradually resuming, which will also drive the growth of existing home sales.

Prices are rising steadily, and supply-side factors are still dominant

• It is expected that the price of existing homes in the United States will continue to rise steadily in 2024, with the median reaching US$390,000, an increase of about 4%. The main reasons for the rise in housing prices are:

o The contradiction between supply and demand remains tight, and housing inventory is near historical lows.

o Rising construction material and labor costs have pushed up housing construction costs.

o Rising land prices in some areas have also supported housing prices.

Inventory remains low, and sellers are reluctant to sell

• As of the end of May 2024, the inventory of existing homes in the United States was 1.07 million, a year-on-year increase of 10.3%.

• At the current sales rate, housing inventory can meet demand for about 2.9 months, which is still near historical lows.

• Low housing inventory has exacerbated the contradiction between supply and demand and supported the continued rise in housing prices.

• In addition, some sellers are reluctant to sell because they have locked in low-interest loans, which has further reduced housing supply.

Overall, the U.S. existing home market is expected to remain stable in 2024, but the growth rate will slow down. House prices are expected to continue to rise steadily, but the increase may narrow.

Sources:

• National Association of Realtors (NAR): Existing Home Sales

• Housing Market Tracker: US Existing Home Sales Forecast

• Realtor.com: 2024 Housing Market Forecast