Home sales rose in June. Here’s what potential buyers need to know.
Buyers in today’s real estate market are struggling with a shortage of home inventory. But things are opening up a bit in this regard.
In June, the total housing stock edged up to 1.25 million units and 2.6 months supply, up slightly from the 2.5 month supply in May, according to the National Association. of Realtors. This, in turn, led to an increase in existing home sales, which were up 1.4% from May. But what is more impressive is that they increased by 22.9% compared to the previous year. This is a clear indication that the offer has picked up.
That said, the housing stock at the end of June was still down almost 19% from the previous year. So, buyers today may still face their share of challenges as they attempt to navigate today’s real estate market.
Is Now a Good Time to Buy a Home?
From an inventory and price standpoint, it’s actually a bad time to buy a home. While the fact that inventories rose in June is a good thing, a 2.6-month home supply still gives sellers a big advantage over buyers. It takes 4-5 months supply to give buyers more negotiating power.
In addition, because supply is still generally down, house prices have increased. In June, the median price of an existing home was $ 363,300. This is a 23.4% increase from June 2020, when the median home price was $ 294,400. Plus, the price increase was universal – every region of the United States saw price increases in June.
As such, buyers who attempt to buy a home today are likely to end up paying a lot more than usual – and as a result, they will take on higher mortgages. The good news is that mortgage rates are still at competitive levels, which can help offset rising home prices. But that may not be enough to propel homes today into the affordable range for budget buyers.
The advantage of waiting
Many people want to buy a home for the short term in order to take advantage of today’s attractive mortgage rates. But those rates are likely to stay low not only for the rest of the year, but also until 2022. And given that the housing stock has slowly but steadily increased, it could be advantageous for buyers to sit back and watch. how these incremental increases impact home prices.
We have just seen the supply of available housing drop from 2.5 months in May to 2.6 months in June. It could be that the July numbers are 2.8 months of homes and that in August we are at the 3 month supply bar.
If that happens, those slight increases will make a difference over time, which is why it might be a good idea for some buyers to take a break from their home search and resume it later in the year, or even in 2022. Hopefully, an increase in supply will lower home prices so that buyers have more options – and don’t have to stretch so financially to own a property.