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A light at the end of the tunnel? Slumping Lehigh Valley home sales could be near rebound

Could the Lehigh Valley's inventory of homes for sale see a rebound in 2024?
Matt Rourke/AP
Could the Lehigh Valley’s inventory of homes for sale see a rebound in 2024?
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Homebuyers in the Lehigh Valley and beyond have had to deal with a shortage of homes for sale and higher interest rates over the last year. Could there be some relief in 2024?

“While things are not the easiest for homebuyers — or sellers — there is light at the end of the tunnel,” Greater Lehigh Valley Realtors President Howard Schaeffer said. “We have been seeing first-time buyers tiptoeing back into the market this year with a little less competition and fewer multiple-offer scenarios.

“While the share of first-time buyers is still near historic lows, it is higher than last year. Notably — and positively — today’s first-time buyers had household incomes nearly $25,000 above last year and are more likely to use financial assets to enter the market,” Schaeffer said.

October statistics from GLVR showed the purchase activity was still down when compared with the same period last year, largely because of high interest rates. That kept many current homeowners from selling, causing inventory to remain at historically low levels nationwide.

Closed sales dipped 12.6% to 522 listings. Inventory slipped 30.9% — there were 643 units in October for Lehigh and Northampton counties. With inventory still not at sufficient levels, the median sales price increased 4.9% to $310,000.

“The shortage of homes for sale is making it harder for buyers to find a home to purchase while at the same time pushing sales prices higher nationwide,” GLVR CEO Justin Porembo said.

National Association of Realtors Chief Economist Lawrence Yun said higher interest rates, which have been as much as 8%, have had a negative impact nationwide.

“Twenty-year-high mortgage rates have held off home buyers,” Yun said. “There’s also a lack of housing inventory to sell, which means fewer opportunities for sales in the marketplace.”

He said that home sales will likely decline by 18% this year, compounding a 17% reduction last year.

Turnaround in ’24?

Interest rates may have crested, Yun said. He predicted they will drop to between 6% and 7% by the spring, which will bring out more sellers.

“I believe we’ve already reached the peak in terms of interest rates,” Yun said. “The question is, when are rates going to come down?”

Home builders, according to NAR, have been trying to keep up with the demand, which could also help with supply and demand issues.

“Builders are back on their feet, up 5% in newly constructed home sales year to date,” Yun said. “Builders can simply create inventory. In a housing shortage environment, builders are really benefiting.”

He explained NAR’s advocacy efforts are helping create inventory, but it will take time.

“Pent-up sellers cannot wait any longer. People will begin to say, ‘life goes on,’ ” Yun said. “Listings will steadily show up, and new home sales will continue to do well. Existing home sales will rise by 15% next year.”

GLVR’s Porembo said household income is also on the rise, but it will still be a tough climb for many who want to buy a home. He said NAR’s 2023 Profile of Home Buyers revealed a surge in median household income among home buyers, rising from $88,000 to $107,000 in the past year.

“But this underscores the growing financial threshold required to purchase a home,” he said.

Morning 첥Ƶ reporter Evan Jones can be reached at ejones@mcall.com.

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