Analysts report nationwide housing shortage easing up, boosting sales
Existing-home sales increased for the second straight month in July, the National Association of Realtors said Monday, boosted by an uptick in housing supply.
Total sales of previously owned homes rose 2% from June to an annualized rate of 5.99 million in July. Single-family home sales ticked up 2.7% from 5.14 million in June to 5.28 million in July. Meanwhile, existing condominium and co-op sales fell from 730,000 units to 710,000 units over the month.
“The July increase in existing-home sales to just under a six-million-unit pace was the strongest pace of sales since March 2021,” said Joel Kan, AVP of economic and industry forecasting at the Mortgage Bankers Association. “Amid the ongoing supply and affordability challenges, there was a slight decline in the share of first time-homebuyers to 30% of sales.”
NAR chief economist Lawrence Yun attributed the overall increase to the improvement in housing inventory, which was up 7.3% from the previous month to a total of 1.32 million units. Unsold inventory sits at a 2.6-month supply at the current sales pace, up slightly from the 2.5-month figure recorded in June but down from 3.1 months in July 2020.
“We see inventory beginning to tick up, which will lessen the intensity of multiple offers,” Yun said. “Much of the home sales growth is still occurring in the upper-end markets, while the mid-to lower-tier areas aren’t seeing as much growth because there are still too few starter homes available.”
Read more: Finding a starter home gets even harder – Freddie Mac
The median existing-home price for all housing types climbed 17.8% year over year to $359,900 – marking 133 consecutive months of annual gains. The median existing single-family home price jumped 18.6% to $367,000, and the price of an existing condo rose 14.1% to $307,100 in July.
“With median sales prices remaining close to record highs, there are prospective buyers who are priced out, and first-time buyers tend to be particularly sensitive to these elevated prices. They are also competing with an elevated share of cash buyers – up to 23% of all buyers compared to 16% a year ago,” Kan said.
“Although we shouldn’t expect to see home prices drop in the coming months, there is a chance that they will level off as inventory continues to gradually improve,” Yun added. “In the meantime, some prospective buyers who are priced out are raising the demand for rental homes and thereby pushing up the rental rates.”
