The National Association of Realtors (NAR) has settled the commissions lawsuit, according to David Goldman and Anna Bahney of CNN. NAR settled landmark antitrust lawsuits by paying $418 million in damages and eliminating some of its rules on commissions. The NAR also agreed to implement a set of new rules, including prohibiting agents’ compensation from being included on listings placed on local centralized listing portals. Another new rule requires buyers’ brokers to enter into written agreements with their buyers.

Alex Veiga of Reuters reports on the story, highlighting that the new rule changes set to effect in mid-July could lead to homebuyers and sellers negotiating lower real estate agent commissions. This practice has been customary since the 1990s, as agents working with a buyer and seller typically split a commission of around 5% to 6% paid by the seller. However, the rule changes agreed by the NAR as part of a settlement could give home sellers and buyers more impetus to negotiate lower agent commissions.

Source: Redfin (March 2024)

This will have significant implications for homebuyers and real estate investors alike, according to Debra Kamin of the New York Times: “The deal, and the expected savings for homeowners, could trigger one of the most significant jolts in the U.S. housing market in 100 years…Americans pay roughly $100 billion in real estate commissions annually, and real estate agents in the United States have some of the highest standard commissions in the world.”

Steven Byerley of MPA reports on the changes, noting that “by enabling buyers to negotiate compensation upfront, the agreement could usher in a new era of price consciousness among consumers. Some may choose to forego traditional agent services altogether, while others may opt for limited services at reduced fees. For instance, buyers might opt to pay agents solely for assistance with offer preparation and inspection review, foregoing the need for agent-led home tours.”

SFRs

ATTOM Data Solutions released a new report showing the top counties for buying and selling single-family rentals. Rising rents result in increased investment returns for landlords, as rental demand is driven by a limited supply of homes for sale and a slowdown in home price increases.

Source: ATTOM (March 2024)

“The Q1 single-family rental report noted that rental returns are on the rise across most of the nation. Potential annual gross rental yields for three-bedroom properties in 2024 have increased compared to 2023 in 216 out of the 341 counties analyzed in the report (63 percent). Leading the increase are counties such as Taylor County (Abilene), TX (yield up from 7.6 percent in 2023 to 11.3 percent in 2024); Jefferson County (Birmingham), AL (up from 8.5 percent to 12.1 percent); Richmond County (Augusta), GA (up from 9.6 percent to 12.7 percent); Midland County, TX (up from 8.7 percent to 11.7 percent); and Aiken County, SC (outside Augusta, GA) (up from 8.4 percent to 11.1 percent).”

Connie Kim of HousingWire reports on ATTOM’s data, highlighting that the average annual gross rental yield for a three-bedroom home in the same markets is projected to increase from 7.39% in 2023 to 7.55% in 2024.

Will Robinson, also of HousingWire, reports on the build-to-rent sector, noting that investment firms Pretium Partners and Blackstone invest billions to acquire build-to-rent homes. The country faces a severe housing shortage due to decades of underbuilding and underinvestment. Robinson notes that Cushman & Wakefield predict that institutionalization is imminent for the sector as demand for rentals remains high due to tight for-sale inventories and high home prices.

Source: HousingWire (March 2024)

Richard Berger of Globe St reports on the rise in SFRs, highlighting a new report by Northmarq showing that renting a single-family home is $825 cheaper than buying one with a standard mortgage payment. Vacancy rates for single-family rentals remained elevated throughout 2023, peaking at 8% during Q1 and ending the year at 7.8%, which is 300 basis points higher than the 2021 low.

Rates fall, listings surge

Hannah Jones of Realtor.com reports on falling mortgage rates, noting that the 30-year mortgage rate fell 14 basis points to 6.74% due to strong employment and inflation data. Mortgage rates remain elevated due to inflation data that is not improving at the necessary pace.

Source: Realtor.com (March 2024)

“Today’s homebuyers are relatively optimistic about the path of mortgage rates. As the spring heats up, some buyers may hold off in the hopes that mortgage rates move lower, but either choice (buying now or waiting) comes with tradeoffs. Spring buyers may see higher mortgage rates, but summer buyers are likely to see higher home prices and uncertainty around mortgage rates.”

Data from Redfin highlights that listings have increased as we enter the busier spring homebuying season. Pending home sales decreased by 6% YoY due to high housing costs, but mortgage-purchase applications rose for the second week in a row. The supply of homes is improving, with new listings up 13% and the total number of homes for sale up 3%. 

Source: Redfin (March 2024)

Redfin Economic Research Lead Chen Zhao comments:

“Mortgage rates are likely to stay high a little longer than expected, with the latest inflation report essentially eliminating any chance of the Fed cutting interest rates before June…Buyers who can afford to may want to get serious about their home search now, as housing costs are unlikely to fall anytime soon. The uptick in listings should be another motivator for buyers: There’s more to choose from, and improving inventory may bring out more competition from other buyers as we get further into spring. Some buyers have already gotten the memo, with mortgage applications finally increasing after weeks of declines.”

Mike Simonsen of HousingWire reports on key home listing data, showing that inventory could go much higher over the coming year. 

• There are now just over 500,000 single-family homes on the market in the U.S.
• That’s up a half percent from last week and is now 21% more than a year ago.
• There are 100,000 more single-family homes on the market than there were in March of last year.
• Unless mortgage rates fall from here, then by July, we could have 40% more homes on the market than a year ago.