Sales of existing homes (which include single-family homes, townhouses, condominiums and cooperatives) increased 2% in July over the previous month, an increase of two consecutive months, according to a report by the National Association of Realtors. .
“There has been a shift in the market, from overheating to very strong,” said Lawrence Yun, chief economist at the NAR.
A steady supply of inventory has pushed house prices up over the past year, but that picture is improving slightly, Yun said. The inventory of unsold homes increased 7.3% from June to July, but was still down 12% from the previous year, NAR reported. Unsold inventory is at a 2.6-month supply at the current sales rate. A balanced market means a supply of homes for 6 months.
“We see inventory starting to increase, which will decrease the intensity of multiple bids,” Yun said. “Much of the growth in home sales continues to occur in high-end markets, while mid-low level areas are not having as much growth because there are still too few initial homes available.”
The average price of an existing home in July was $ 359,900, up 17.8% from a year ago and marked 113 consecutive months of year-over-year gains. But the July price jump falls from the 20% or more increases that occurred in the market over the past year.
“While we shouldn’t expect house prices to drop in the coming months, there is a possibility that they will decline as inventory continues to improve progressively,” Yun said.
But many people remain priceless. First-time buyers continue to struggle in this market and rent rates increase as they give up buying, Yun said. The proportion of first-time buyers in July was 30%, compared to 31% in June and 34% in July 2020.
“Despite the ongoing challenges of the current real estate market, including limited inventory, quick home sales, and competition from big-pocketed investors, many buyers are finding ways to persist until they find and close a home.” said Hale.
Still, he said, there are many potential buyers who are thinking about stopping the search. But, Hale said, they should be aware that there is usually a seasonal decline in competition toward the fall.
“While last fall we didn’t see this sweet spot as buyers made up for lost time due to blockages, there are indications that we will see it this year,” he said.
Yun said he has heard anecdotal reports from NAR member agents indicating that fewer homes are being sold for a higher price than the sale price earlier this year and that there is less intensity around bidding wars.
He hopes there will be a turning point this year where inventory will be higher than the previous year.