Buyer demand has remained strong as it resulted in homes going under contract in less than 30 days for the fourth month in a row this past July. There were ebbs and flows in sales across the nation this summer due to the shortage of housing stock, but overall a marginal decline in the numbers.
Specifically, the total number of completed sales transactions had experienced a small decrease by 1.3% in July. However by perspective, this pace was still 2.1% higher than this time last year in 2016.
Lawrence Yun, NAR chief economist, says the second half of the year got off on a somewhat sour note as existing sales in July inched backward. “Buyer interest in most of the country has held up strongly this summer and homes are selling fast, but the negative effect of not enough inventory to choose from and its pressure on overall affordability put the brakes on what should’ve been a higher sales pace,” he said. “Contract activity has mostly trended downward since February and ultimately put a large dent on closings last month.”
In the pricing arena, the median home price for existing homes in July was up by 6.2% over last year. This was the 65th month in a row of year-over-year gains. By contrast, housing stock has continued to decline for the past 26 year-over-year months in a row which has led to the current challenges.
“Home prices are still rising above incomes and way too fast in many markets,” said Yun. “Realtors® continue to say prospective buyers are frustrated by how quickly prices are rising for the minimal selection of homes that fit buyers’ budget and wish list.”
The slim inventory is the primary reason that most homes are not on the market for long these days. In July, 51% of the properties that sold that month were on the market for less than 30 days.
“July was the fourth consecutive month that the typical listing went under contract in under one month,” said Yun. “This speaks to the significant pent-up demand for buying rather than any perceived loss of interest. The frustrating inability for new home construction to pick up means inadequate supply levels will keep markets competitive heading into the fall.”
In several real estate markets across the U.S., fall market is often a busy market where sales can soar much like spring. It is expected that home inventory levels should rise as sellers seek to take advantage of the selling season.