POST TAGSMortgage News
Blog posted On August 03, 2021
Last week, the Commerce Department released their report on new home sales in June. Though the level of completed new homes sales was lower than expected, the level of new homes on the market increased to a pandemic high. Earlier this month, the National Association of REALTORS® (NAR) revealed that the level of existing home sales increased in June after four straight months of declines. The cause? More available homes for sale. With continued inventory gains, home buyers could be seeing less competition and lower home prices over the next several months.
In June, new home inventory rose to a seasonally adjusted estimate of 353,000, or a 6.3-month supply. This is the highest monthly supply of new homes since March 2020. Total housing inventory rose 3.3% to a level of 1.25 million units. Unsold inventory increased as well, up to a 2.6-month supply.
"Supply has modestly improved in recent months due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales," said Lawrence Yun, chief economist of the NAR. "Home sales continue to run at a pace above the rate seen before the pandemic."
Total existing home sales climbed 1.4% month-over-month in June and nearly 23% year-over-year. “That’s due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales,” said Yun. “Home sales continue to run at a pace above the rate seen before the pandemic.”
Homes will likely start to become more affordable as housing inventory continues to increase. Right now, the median existing-home price is $363,300. "At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year," Yun said. "Ideally, the costs for a home would rise roughly in line with income growth, which is likely to happen in 2022 as more listings and new construction become available."
Over the past year, home price appreciation has had record-breaking gains. Home buyer demand has been soaring due to historically low mortgage rates and the COVID-related desire for more space. While homeowners have been benefitting greatly from the increase in home values, home buyers have been finding it hard to make competitive offers on a home. Many are offering thousands over the asking price and even waiving inspections and appraisals. A large cause of the increase in prices has been a combination of this high home buyer demand and record-low home supply.
Home builders have been struggling to keep up with the pace of demand due to high costs of materials and low levels of labor availability. However, lumber prices are starting to slowly come down and the supply of homes is beginning to tick up.
If you’re interested in buying now the best place to start is by getting preapproved. Having a letter of preapproval can help you make a stronger offer and compete with other buyers. To get started on your preapproval click the “Get Started” button above!
Sources: FRED, HousingWire, NAR