May 2024 Real Estate Surge: Discover Why Madison's Housing Market is Heating Up

by John Reuter

May marks the beginning of the traditional peak season for home sales, with approximately 43% of annual closings typically taking place between May and August. In May 2024, home sales increased by 11% compared to May 2023, and the median price rose to $315,500, a 6.9% increase over the past 12 months. Year-to-date, home sales were 12.1% higher than the first five months of 2023, and the median price rose 7.3% to $295,000 over that same period.

Improving inventories contributed to the boost in sales statewide, with new listings up 4.7% compared to May 2023, and total listings up 5.4% over the same period. Regionally, home sales rose by double-digit margins in all but one area. The West region saw the strongest growth, increasing by 25.4% compared to May 2023. The Central, North, and South Central regions grew between 14.5% and 16%, and the Northeast region saw a 10% increase over the last 12 months. In contrast, the Southeast region's sales grew by 4.4%, but this region had the lowest months of available supply at just 2.9 months in May, while other regions had between 3.4 and 4.4 months of supply.

The average 30-year fixed-rate mortgage rose by 63 basis points over the past 12 months, reaching 7.06% in May, causing affordability to drop to an all-time low. The Wisconsin Housing Affordability Index, which measures the share of the median-priced home that a buyer with median family income qualifies to buy (assuming 20% down and financing the remaining balance with a 30-year fixed mortgage at current rates), fell by 11.3% from 133 in May 2023 to 118 in May 2024.

Additional Analysis

Home Sales Continue to Grow “While there are certainly some headwinds in this market with average mortgage rates topping 7% in May, it is good to see ongoing sales growth as we enter the peak season for home sales.”

Mary Jo Bowe, 2024 Chair of the Board of Directors, Wisconsin REALTORS® Association

Affordability Challenges “This is a tough environment for buyers given the high mortgage rates and limited supply of available homes on the market. We have tracked Wisconsin’s affordability level since 2009, and unfortunately, affordability hit its all-time low point in May. The good news is that supply has been improving since late last year, which has moderated the rate of price appreciation. Hopefully, mortgage rates also will moderate and help improve our affordability during the summer sales period.”

Tom Larson, President & CEO, Wisconsin REALTORS® Association

More Progress on Core Inflation “The Fed focuses on core inflation when deciding whether to cut short-term rates to stimulate the economy. Core inflation omits the food and energy sectors since they are somewhat volatile and less reflective of long-term inflation expectations. Core CPI inflation was at 5.3% a year ago, and it stood at 3.9% in January. Most recently, it fell to 3.4% in May. Although inflation remains above the Fed’s target rate of 2%, May core inflation came in lower than economists had expected. In their most recent meeting, Fed policymakers signaled they were not prepared to lower rates in June. Hopefully, continued progress on core inflation increases the likelihood of at least one rate cut in 2024.”