Data & Research for Second Home Markets

I’m Austin, CEO and co-founder of Pacaso. The housing market is indicating signs of recovery and stability in home prices, and we at Pacaso ended the summer with strong sales. Prospective homebuyers are increasingly turning to new construction due to the shortage of existing home listings and continuously fluctuating mortgage rates. This shift in buying behavior has resulted in a surge in new home sales and a modest uptick in pending sales, suggesting positive momentum in the market. Here is a deeper dive into these observations: Home builders fuel slight sales surge Prospective homebuyers are undoubtedly feeling frustration amid scarce listings for existing homes. As a result, Zillow reported that an escalating number of them are opting for new construction, enticed by the prospect of availability. According to the U.S. Census Bureau sales of new single-family homes surged by an annualized rate of 714,000 in July, marking a 4.4% increase from June's revised sales pace and a remarkable 31.5% jump compared to July 2022. Additionally, according to Redfin, pending home sales saw a modest increase in July, climbing by 0.7% compared to the previous month, reaching the highest level since the beginning of the year. In August 2023, Pacaso saw its strongest month of the year so far, recording a 142% increase in funded shares compared to July 2023. Inventory remains low as buyers look to alternatives New listings hit a seasonal low in July, with just under 336,000 properties coming to the market according to Zillow. This represents a 26% decrease compared to last July when new listings were already declining due to rising interest rates. However, Redfin reported that home builders continue to play a pivotal role in increasing inventory, accounting for one-third of houses on the market. Given the scarcity of inventory, homebuyers have alternative options like the rental market, which can provide an affordable option as they save up for a home purchase. In top second home markets, co-ownership options like Pacaso offer an innovative solution amidst soaring rates. This ownership model enables buyers to own a portion of a luxury second home, reducing their monthly mortgage costs in markets like Vail and Tahoe compared to full ownership. Pacaso's resale market is also thriving, with homes averaging a more than 10% historical gain for owners. Housing market set to embrace 7%+ rates In August, mortgage rates reached their highest levels in 21 years, as reported by Freddie Mac. Most recently, the 30-year fixed-rate mortgage hovered above seven percent for the fourth consecutive week. While current mortgage rates are hovering above seven percent, the forecasted rates from Fannie Mae indicate that they may gradually decrease in the coming years, offering some hope for buyers and sellers who have to adjust to the new norm of higher rates. Fannie Mae predicts rates to average 6.6% in 2023 and 6.3% in 2024. Annual home prices stabilize, indicating housing market recovery Low inventory continues to cause U.S. home prices to increase. However, the recent rise in mortgage rates to 7% has cooled down the previously upward trajectory of home prices, which had been steadily increasing throughout the year. In June, prices rose on a monthly basis while annual prices remained unchanged, signaling a shift in the housing market. CoreLogic's S&P Case-Shiller Index, a non-seasonally adjusted, month-over-month index, recorded a 0.9% home price gain in June — its fifth consecutive month of gains This represents a smaller increase compared to May's 1.3% increase, indicating that price growth is stabilizing in response to higher mortgage rates. We'll continue to check in with updates, and encourage you to contact us with any questions about a market of interest.

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