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The most recent data available from the National Association of Realtors shows three things: (1) home prices are still on the rise, (2) home sales in units are down, but (3) existing home inventories rise for the first time in 3 years! Perhaps these recent statistics that tend to compete against each other are a temporary blip? Or, perhaps they are a sign that we are starting to move back to a more “balanced” market. For insight, I often refer to the Scotsman Guide, an online trade journal for mortgage professionals. There are two recent articles published in the Scotsman Guide on July 24th and July 30th that I found to be very interesting. I thought that I would share them with you below.
“Sales of existing homes decreased in June, the third straight month-over-month decline in sales, according to the National Association of Realtors (NAR). The number of closed sales for single-family homes, townhomes, condominiums, and co-ops fell to 5.38 million, down from 5.41 million in May. Existing-home sales in June were down 2.2 percent on a year-over-year basis. Declines in the number of home sales in the South and West exceeded gains in the Northeast and Midwest, according to NAR. Still, median sales prices rose to an all-time high in June, in part due to the ongoing supply-and-demand problem. The national housing shortage is pushing prices up and slowing actual sales. The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation’s housing market,” Yun said. “What is for sale in most areas is going under contract very fast and, in many cases, has multiple offers. This dynamic is keeping home-price growth elevated, pricing out would-be buyers and ultimately slowing sales (Lawrence Yun, NAR Chief Economist).” “The median existing-home price for all housing types in June was $276,900. That’s up 5.2 percent from June 2017, when the median price was $263,300. It’s also the 76th straight month of year-over-year gains. The nation’s housing inventory actually climbed 4.3 percent in June month over month, to 1.95 million existing homes. That figure is up 0.4 percent, compared with June 2017 — representing the first year-over-year increase in inventory since June 2015, according to NAR.”
“Yun characterized that as a modest increase in inventory, far too little to satisfy demand. He said it remains to be seen if the inventory growth will actually continue, with more buyers in the market and new-home construction failing to keep pace with demand.
First-time buyers represented 31 percent of sales in June, which is unchanged from the prior month and down from 32 percent a year earlier. NAR’s 2017 Profile of Home Buyers and Sellers — released late last year — showed that the annual share of first-time buyers was 34 percent.”
A second article from the Scotsman Guide released on July 30th declares an increase in homebuyer activity as the inventory crunch eases.
“NAR’s pending-home-sales index rose 1 percentage point, to 106.9, over the May level. The index remained 2.5 percent below the June 2017 level. Although the monthly uptick broke a string of recent disappointing housing reports, NAR was still forecasting that existing-home sales would end the year down compared to the 2017 level, clocking in at around 5.46 million sales for 2018, down 1 percent from 5.51 million in 2017. The good news is that the worst of the tight housing supply conditions may have passed, according to NAR. Existing home inventories rose on an annual basis for the first time in 3 years in June, and several major metros posted a significant year-over-year jump in listings. “Home-price growth remains swift and listings are still going under contract at a robust pace in most of the country, which indicates that even with rising inventory in many markets, demand still significantly outpaces what’s available for sale,” NAR Chief Economist Lawrence Yun said. “However, if this trend of increasing supply continues in the months ahead, prospective buyers will hopefully begin to see more choices and softer price growth (Len Kiefer, Freddie Mac Deputy Chief Economist).” The increase in contract signings mirrors recent trends when you compare it to mortgage-rate movements, Kiefer said. Rates moved higher in the first five months of 2018, but have stabilized around 4.5 percent since June. This stability and a strong economy just might be the ingredients the housing market needs to get back on track.”
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