Opportunities Remain for Home Buyers to Benefit from Appreciation Gains
Existing Home Sales fell 3.3% from May to June to a 4.16-million-unit annualized pace, per the National Association of REALTORS(NAR). Sales were also 18.9% lower than they were in June of last year. This report measures closings on existing homes, which represent around 90% of the market, making it a critical gauge for taking the pulse of the housing sector.
What’s the bottom line? Tight supply played a key role in the pace of sales, per NAR’s Chief Economist Lawrence Yun, who noted that, “The first half of the year was a downer for sure with sales lower by 23%. Fewer Americans were on the move despite the usual life-changing circumstances. The pent-up demand will surely be realized soon, especially if mortgage rates and inventory move favorably.”
Existing Home Sales fell 3.3% from May to June to a 4.16-million-unit annualized pace, per the National Association of REALTORS(NAR). Sales were also 18.9% lower than they were in June of last year. This report measures closings on existing homes, which represent around 90% of the market, making it a critical gauge for taking the pulse of the housing sector.
What’s the bottom line? Tight supply played a key role in the pace of sales, per NAR’s Chief Economist Lawrence Yun, who noted that, “The first half of the year was a downer for sure with sales lower by 23%. Fewer Americans were on the move despite the usual life-changing circumstances. The pent-up demand will surely be realized soon, especially if mortgage rates and inventory move favorably.”
In fact, total existing housing inventory at the end of June equaled 1.08 million homes, well below normal with just 3.1 months’ supply available at the current sales pace. Redfin’s Housing Report for June further reiterated the tight supply we’re seeing, with active and new listings down 15% and 31% year-over-year, respectively. Yun added that, “There are simply not enough homes for sale. The market can easily absorb a doubling of inventory.”
Despite these supply constraints, demand among buyers remains strong as evidenced by how quickly correctly priced homes are selling. Homes stayed on the market on average for 18 days last month, while 76% of homes sold in June were on the market for less than a month. By comparison, this is up from 65% back in March.
Very tight inventory and strong demand puts upward pressure on home prices. Zillow, Black Knight and FHFA are already reporting record high home values in their indexes, showing why now remains a great opportunity to build wealth through homeownership.
Resource: MBS Highway Weekly Newsletter
