Sales On The Rise in Charlotte’s Winter Months, But Not For Long.

In October, lower mortgage rates led to a boost in home sales and pending contracts in the Charlotte region. Home sales rose by 4.4% and pending contracts increased by 4.8% from September, with year-over-year sales up by 1.7% and pending contracts up by 23.6%. This growth follows two months of declines and is largely attributed to reduced mortgage rates and the conclusion of the presidential race. However, the increase may be temporary, as home prices continue to rise.

Supply & Demand V.S Interest Rates:

Although the Federal Reserve is expected to continue lowering interest rates in 2025, mortgage rates are unlikely to drop significantly. In the Charlotte region, housing supply increased by 35% from October 2023, but buyer demand also rose, with pending contracts up 23.6%. Despite the supply increase, Canopy notes that it remains insufficient, and the ongoing housing deficit is likely to keep mortgage rates elevated.

Supply V.S Housing Costs:

In October, rising demand for housing pushed up prices in Charlotte. The median sales price reached $395,000, while the average sales price was $492,068, marking year-over-year increases of 3.9% and 5.7%, respectively. The average list price rose by 4.9% to $510,373. To comfortably afford a home at the median price, a household would need an income of at least $138,036, significantly higher than the average Charlotte salary of $68,880. As a result, three out of four households in the city cannot afford to buy a home at the median sales price.

To Buy Or Not To Buy:

Housing construction is slowing down when compared to how Charlotte’s population is increasing. New single-family and townhome projects are in the works, such as the Eastland Yards development and the River District. But those aren’t set to open until about 2026. However, Canopy says if buyers are looking for affordable homeownership opportunities, townhomes and condos may be the way. Townhome inventory in Mecklenburg County rose by 46% in October and condos increased by 83%.

Mortgage rates will continue to fluctuate but buyers who are ready to purchase should not hesitate or wait for the perfect rate, it wont happen. More than 80% of properties in the (multiple listing service) are eligible for some type of down payment and closing cost assistance, and programs cap at $760K. So, it’s not just for lower-priced homes

Instant Reaction: My Monthly Mortgage Outlook

As we approach the final weeks of 2024, the rate market is experiencing a bit of post-election stability. While rates remain higher than we’d prefer, we’re starting to see signs of progress, with a potential light at the end of the tunnel. The latest Fed meeting resulted in a 0.25% cut to the Fed Funds Rate, and with one more meeting before the year ends, it’s still unclear whether the Fed will make another cut, or hold rates steady. It’s important to remember that changes in the Fed Funds Rate don’t directly translate to the interest rates lenders charge, but they do offer valuable insight into how the Fed views economic conditions and the ongoing efforts to manage inflation.

Buyers in the Charlotte Metro market are still well-positioned to purchase now rather than waiting for rates to bottom out (whenever that may be) and paying 5%, 10%, or even 20% more for the same home in a year or two. Appreciation values in our area are strong and with a busy spring approaching, stomaching a higher interest rate on a mortgage now and refinancing later seems far preferable to waiting.