July Residential Market Update Highlights for the Kansas City Region
Last month, the headlines read, “Highest Median Sales Prices Ever!” This month’s headlines for the July stats have been, “House Prices Drop for First Time This Year.” But is it really news? In Kansas City, it isn’t. The median sales price peaks almost every year in June and then drifts down to December or January before starting the cycle again the next year, heading toward a peak in June.
When we compare July 2024 to July 2023, we saw the 10th straight month of year-over-year gains, with the median sales price jumping 7.9% in 2024. August growth may not be as strong, since August 2023 growth was sandwiched between two months of no growth. Interest rates have dropped close to 52-week lows, which may pull some buyers off the sidelines and increase demand a little, potentially pushing prices slightly higher.
New listings of existing homes had the second-highest growth of the last year, with an almost 13% increase in the number of new listings over July 2023. Eight of the previous nine months have seen growth, with a couple of those months having less than 1% growth, including June with a minuscule 0.2% increase.
The increase in new listings did not result in a similar increase in contracts written, but there was a 3.35% increase. This reverses the downward trend in the second quarter, which saw negative changes in May and June after a less than 1% increase in April. We may see an increase in August, with interest rates coming down a bit at the beginning of August and more homes on the market with the increase in new listings in July.
The large June drop in contracts written was a bit of a surprise, but July saw a nice recovery. The 5.43% increase in July is the second largest in the last year and the fourth year-over-year increase in five months. July was only the third month where median sales price, listings, contracts written, and closings all saw year-over-year increases in the same month.
If these July numbers continue into future months, with more listings coming on the market and smaller but still increasing contracts and closings, we may see the median sales price show slower growth than the 7% or greater numbers we have been seeing since November 2023. With more listings not going under contract immediately, inventory will slowly increase, getting us closer to a balanced market and possibly fewer multiple-offer situations. This could slow appreciation as buyers have more options, and homes start to stay on the market longer.
This month brings us the NAR settlement changes, with the Kansas City area removing compensation from the MLS on August 14th, and new forms like the listing agreements that don’t have cooperative compensation for the buyer’s agents built into the agreement. Does this mean sellers will no longer pay a buyer’s agent’s brokerage? The answer is it depends on what the buyer asks the seller to do in the contract. Will this lead to a slowdown in the market? It is hotly debated, and a big change like this is a market disruptor. All of this, along with the election, the possibility of a Federal Reserve rate reduction, and increased fears of a recession, should make for an interesting end to 2024.
Dig deeper on Kyle’s website at https://www.housegraphs.com/marei
