May Market Update: Numbers You Can't Afford to Miss

Normal, by definition, is conforming to a standard; usual, typical, or expected according to the

Oxford dictionary I was able to google. Normalizing is what has been happening to the real

estate market since the Federal Reserve started raising interest rates in March of 2022. The

real estate market of Craven County has held strong despite the rising mortgage rates as we

are continuing to see growth in the market. The ‘normal’ the Fed hopes for the real estate

market is why real estate is historically a great long-term investment.

‘Normal’ in a residential real estate market would typically be achieved with approximately 5-6

months’ supply of homes on the market, values increasing 2-4% each year and mortgage rates

hovering just under 8%, as that is average mortgage rate since 1971. Considering what Craven

County’s real estate market has endured the past 6 years, it has been anything but normal.

However, Craven County’s market is on the good side of normal with a bright outlook!

Currently, Craven County has a three-month supply of homes. This is more than twice the

amount of inventory we had last year, though still lower than what economists would call a

normal supply of homes for a real estate market. The supply of homes is calculated by taking the

homes for sale and dividing it by the number of homes selling over a period of time. In Craven

County, there are currently 312 homes for sale, 108 of which are new construction. According to

the supply of homes, known as an absorption rate, it would take three months to sell all the

homes in Craven County if nothing new came on the market. The great news for buyers is that

new homes come on the market every day. Therefore, if you are not finding your dream home

on the market today, do not give up hope! For sellers, as the inventory levels grow, consider

there is more competition for the buyers, which is why the condition of your home and pricing are

more critical than at any time in the 2020s. This is normal, as real estate has always been a price

war and a beauty contest!

As the normalization of the market continues, we are seeing homes sit on the market a bit

longer. The median days on the market for all homes in Craven County is currently 26 days,

which is also twice of what it was last year at this time. The average days on the market have

swollen to 61 days currently. Coming off the record lows of less than a week for average and

median days on the market, the current market seems slow. I would say the market is getting

back to the good side of normal. 12 years ago, the average days on the market were

consistently over two hundred days on the market. The reason a lot of Realtors ask for six

months contracts is because in a normal market, a house should be on the market 4-5 months.

Sellers usually do not want their home on the market for 150 days. Days on the market are not

a friend of the seller as they can encourage buyers to bring in lower offers. It is interesting to

note that of the 193 resales currently under contract in Craven County, 102 of them were on the

market for 3 weeks or less. This is because buyers are still ready to buy when the right home

becomes available at the right price in the right condition.

As the market returns to a normal pace, the number of sales is getting back in line as well. In

the first four months of 2024, we sold 555 homes, compared to 551 for the same period of 2023.

If we go back to the pre-pandemic markets, we sold 600 homes in the first four months of 2019,

though a number of those were flooded homes from Hurricane Florence. We also sold 596

homes in the first third of 2020, showing the same pace of sales as the previous year. To put

those numbers in perspective, in 2012, we sold 373 homes, followed by 422 in 2013 for the same

first third of those years. However, the pandemic had everything selling. In 2021, we sold 789

homes in the first four months and followed that up by selling 772 homes in the first four months.

The two pandemic years were not normal, and why a normal pace of sales returning may feel

slow to most folks. The number of sales being 200+ homes off record highs is not concerning

and should be a sign of a healthy market. At the pace homes are selling now, buyers have a

chance to see the property and do not have to be one of twenty offers on the first day on the

market. We are still selling a lot of houses in Craven County, as there are almost as many

homes for sale (312) as we have currently under contract (300).

The normalization of the market in Craven County has also caused prices to slow down from

going up quite so fast. In both Craven and Carteret Counties, the median sales price dropped in

comparing April of 2024 to April of 2023. We saw a median price drop of 2.57% in Craven

County, though it is up 4.38% for the year. In Carteret County, as a comparable, median sales

prices dropped 6.67% April over April, though it is up 16.93% for the year. Pamlico County saw

their median price increase by 1.35% in April ’24 over April of 2023, though their median price is

up 23.79% for the year. The average price in Craven County is up 6.48% this year so far. This is

lower than Pamlico County’s 7.47% average price increase and Carteret County’s 13% average

price increase. However, the Fed wanting a normal price increase of 2-4% per year is still not

happening, though we are not seeing the 20-25% price increases we saw a couple of years

ago. The price increases are showing up in what price points are selling. We have seen almost

three times as many homes sell in the $500,000-$549,999 range sell in the first four months of

2024 than we did last year. However, there have been about 6% less homes sold priced below

$349,999 than we did last year in this same time period. All the segments except one in the

$50,000 increments below $349,999 have seen 12.5% or more decreases in the number of

sales. All $50,000 segments of the market between $350,000-$799,999, except three, have

seen 18% or more increases in the number of sales. Craven County has been discovered, and

people are seeing the value of living in such a wonderful place! This will likely cause prices to

continue to increase over the years to come.

Finally, let us look at how mortgage rates have normalized. We all found it extremely easy to

get accustomed to the 2-3% mortgage rates. Those rates are not normal. As stated at the top

of this article, since 1971, Forbes magazine states the average mortgage rate is just below 8%.

Currently rates are below average as they hover around 7%, depending upon the type of loan

you are getting. My first home I bought in September of 2000 came with an excellent rate of

7.625%. Prior to the Great Recession, interest rates were remarkably similar to what they are

today. If you are waiting to buy when interest rates get back to the 2-3% level, you should go

ahead and likely sign a lifetime lease where are renting and continue to pay the landlord’s mortgage.

The increase in interest rates is why you are seeing less sales in the lower-priced homes. The

increase in mortgage rates has had a greater impact on first-time home buyers and people on

fixed incomes. Higher mortgage rates mean higher house payments and have made the idea of

purchasing a home out of reach for some people. Buyers who bought a home prior to the

pandemic have been able to use the equity of their home as a down payment to help keep their

payments lower. Therefore, the move up price points have fared better than the lower price

points of homes. As a buyer, do not wait for interest rates to go down to purchase. The Fed

said at the end of last year they were going to lower interest rates a few times in 2024. Now, the

Fed is saying they may lower the rates at the end of the year. I would not count on either

happening at this point. If rates do go down significantly, expect prices to jump higher as more

people get back into the market and supply and demand factors start driving prices up again.

Overall, the normalization of the market feels weird to a lot of buyers, sellers, and Realtors. The

positive is that prices are still increasing, we are seeing a bit more negotiating and there is still a terrific opportunity in the Craven County market. Though not all the data would seem positive

since days on the market and the supply of homes are both increasing. However, from a

healthy real estate market perspective, normal is good!