The Biden Administration’s war on the American consumers as well as homeowners continues.
The cost of buying a new house has reached another all-time high, according to a new report from the National Association of Realtors (NAR). The median existing U.S. home sale price rose to $426,900 in June, marking a 4.1% increase from the same period last year. This is the highest level on record and the second consecutive month that prices have topped new highs.
U.S. home prices hit record highs for second straight month in June
Home sales slow again, capping off a disappointing spring selling season
Home prices hit record highs for a second straight month in June, the latest sign that the housing market is priced out of reach for… pic.twitter.com/g2vyj1VveG— Eleanora🇺🇸 (@fhkuehn) July 23, 2024
As home prices soared, sales of previously owned homes fell by 5.4% to an annual rate of 3.89 million units. However, there was a potential bright spot for buyers: inventory increased last month. At the end of June, there were approximately 1.32 million homes for sale, up 3.1% from the previous month and 23.4% from the same time last year.
“We’re seeing a slow shift from a seller’s market to a buyer’s market,” said Lawrence Yun, NAR chief economist. Homes are staying on the market longer, sellers are receiving fewer offers, and more buyers are insisting on home inspections and appraisals. Inventory is rising on a national level.
Oh-oh
U.S. home sales drop 5.4% as median prices hit all-time high of $426,900 https://t.co/dZZnrkLweW via @thecentersquare
— Bill Bradbrooke (@bradbrooke1963) July 23, 2024
In June, homes sold on average in about 22 days, down from 24 days in May but up from 18 days in June 2023. Before the COVID-19 pandemic, homes typically sat on the market for about a month before being sold. At the current sales pace, it would take about 4.1 months to deplete the existing home inventory, the highest level since May 2020. Experts consider a six to seven-month pace as healthy.
Despite the median home price reaching a new record high, further large price increases are unlikely, according to Yun. The supply and demand dynamics are approaching a balanced market condition.
Jul 23: U.S. home sales slowest since 2010, home prices hit new high, inventories continue to rise. #UShomeprice #realestatemarket pic.twitter.com/NCmo87kycI
— New Zealand Digital Asset Exchange (@nzdOne) July 23, 2024
Several factors contribute to the ongoing housing affordability crisis. Years of underbuilding have led to a housing shortage, exacerbated by the rapid rise in mortgage rates and expensive construction materials. Higher mortgage rates over the past three years have created a “golden handcuff” effect, with sellers reluctant to sell due to their record-low mortgage rates of 3% or less, further limiting supply and options for eager buyers.
Economists predict that mortgage rates will remain elevated for most of 2024, only beginning to fall once the Federal Reserve starts cutting rates. Even then, rates are unlikely to return to the pandemic lows, with investors predicting just one or two rate reductions this year.
“Some prospective buyers are simply waiting for mortgage rates to come down after the Federal Reserve cuts rates, most likely in September,” said Lisa Sturtevant, Bright MLS chief economist. With inflation cooling and a solid job market, rate cuts seem inevitable, leading some buyers to wait.
A Zillow survey indicates that most homeowners are nearly twice as willing to sell their home if their mortgage rate is 5% or higher. Currently, about 80% of mortgage holders have a rate below 5%.
Key Points:
- Median U.S. home sale price reached a record $426,900 in June, a 4.1% increase from last year.
- Sales of previously owned homes fell by 5.4% to an annual rate of 3.89 million units.
- Inventory increased by 3.1% from the previous month and 23.4% from the previous year.
- Homes sold on average in 22 days in June, with inventory expected to last 4.1 months at the current sales pace.
- High mortgage rates and underbuilding contribute to the affordability crisis, with homeowners reluctant to sell.
James Kravitz – Reprinted with permission of Whatfinger News
