US home sales have slowed, but prices remain ridiculous

Home sales fell in August, both from July and from a year ago, breaking two straight months of increases, according to the National Association of Realtors.
Home purchases have increased over the past year, which NAR chief economist Lawrence Yun says is an anomaly. The pent-up demand from potential buyers that built up during closures and the lifestyle changes people made during the pandemic, when interest rates remained very low, was behind these increases.

But now the effects of these trends are fading.

“The housing industry is clearly settling down,” Yun said. “Home sales are trying to get back to normal after the big increase we experienced last year.”

Sales of existing homes, which include single-family homes, townhouses, condominiums and co-ops, fell 2% in August from July and 1.5% from a year ago, according to The report.

But sales are still above the pre-pandemic rate, Yun said. And sales for 2021 since the start of the year are 16% higher than in 2020 and up 12% from 2019.

In addition, prices continue to rise.

The median home price in August was $ 356,700, up 14.9% from a year ago, marking 114 consecutive months of year-over-year home price increases. Just to be clear: A 14.9% annual price increase is not normal, Yun said. About 3% to 5% is a more typical annual price increase. But compared to the more than 20% price growth that NAR has reported in recent months, this price drop shows some narrowing of that gap.

“Sales edged down in August as prices rose nationwide,” Yun said. “Potential buyers are looking, but much more measured about their financial limits and just expect more inventory. “

A (somewhat) calmer market, but low stocks remain

Inventories remained stubbornly low in August, continuing to push sales down in the low end of the market, NAR said.

“High house prices create an imbalanced market, but prices would normalize with a larger supply,” Yun said.

The stock of unsold homes at the end of August stood at 1.29 million, down 1.5% from July and 13.4% from a year ago, according to NAR. The unsold inventory is at a 2.6 month supply at the current rate of sales. A balanced market has a supply of about six months.

But there are signs of a slightly calmer, if not softer, softer real estate market ahead.

“Overall, we believe home sales will remain strong over the next year or so, but we should see inventory levels continue to slowly trend toward more normal levels and home price appreciation begin to rise. slow down over time, ”said Ruben Gonzalez, chief economist at Keller Williams.

For aspiring homebuyers, some of the scariest parts of buying a home this spring and last fall – like waiving inspections and competing with many multiple offers and cash offers – have come together. mitigated, Yun said, citing surveys of NAR agents.

But a typical property still sells quickly 17 days on the market, according to the report. In August, 87% of homes sold had been on the market for less than a month.

Even if the market takes hold, affordability remains a challenge.

The share of first-time homebuyers fell to 29% in August, the lowest rate since January 2019.

“Securing a home remains a major challenge for many potential buyers,” Yun said. “A number of potential buyers have simply stopped their search, but their desire and need for a home remains.”

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