The US housing market should be on the verge of a boom with millennial homebuyers feeling more confident in the economy and their personal finances and interest rates low,
But inventory is tightening as demand grows and a new report from realtor.com suggests that things may get tougher for potential homebuyers if the conditions continue.
The Monthly Housing Trend report for July shows a 7% decline in new listings compared to a year ago, while prices eased 0.2% month-over-month to a median $315,000, the earliest seasonal slowdown in prices in 7 years.
The annual increase in the median home price slowed from 8.7% in July 2018 to 5.5% last month.
"July's data highlight tension in the housing markets between buyers eager to take advantage of lower mortgage rates and potential sellers concerned about slowing price growth," said George Ratiu, realtor.com's senior economist. "The decline in newly listed properties suggests that some would-be sellers are stepping back from the market, during the peak buying season, when most people are searching for their next home."
While overall inventory has been building, the entry-level segment tightened further.
Homes priced below $200K saw a 9.9% decrease year-over-year in July compared to a 6.6% increase for homes priced $750K and above. The lower-priced segment also sold faster with an average 56 days on market compared to 81 days for the higher-priced homes.
Millennials are buying
Millennials increased their share of homebuyers in July to 46% from 43% a year earlier.
The cohort spent 5% more year-over-year on average ($248,000) which was a larger rise than Gen-Xers or Baby Boomers reflecting the tightening market for entry-level homes.
Millennials typically had a smaller down payment (average 8.1%) compared to a year ago (8.9%) while older generations increased their down payment.
It means that millennial mortgages averaged $227,000, up from $225,000 a year ago but lower interest rates mean that their monthly mortgage payment fell from $1,131 in July 2018 to $1,099 last month.
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