Home Prices Hit All Time High Even As Sales Continue To Slow

Sales of existing homes — which include single-family homes, townhouses, condominiums and co-ops — fell 5.4 percent in June from May and 14.2 percent from a year ago. June saw the lowest sales rate since June 2020, which was artificially low due to the pandemic. “The decline in housing affordability continues to weigh on potential homebuyers,” said Lawrence Yun, NAR’s chief economist. “Both mortgage rates and house prices have risen very sharply in a short period of time.” The stock, which was tight, posted its first year-over-year rebound in three years. The number of homes available for sale at the end of June was up 9.6% from May and 2.4% from a year ago. “Finally, there are more houses on the market,” Yun said. “Homes that are priced right sell very quickly, but homes that are priced too high discourage prospective buyers.”

The flight to affordable prices

Even as sales fell, home prices continued to rise, especially in some popular Sun Belt cities. Miami had the largest median price increase, up 40.1% from last year. They were followed by Orlando with a 30.6 percent increase and Nashville with a 30.6 percent increase, according to the NAR report. However, some of the same cities that saw huge price growth during the pandemic were also the places that saw the largest increase in the number of homes with price reductions in June. Austin led the way, followed by Phoenix and Las Vegas. While rising inventory will ease pressure on prices, mortgage rates are rising, reducing buyers’ purchasing power. It remains to be seen which factor will have the biggest impact on home sales, said Danielle Hale, chief economist for Realtor.com. “I expect affordability will be the biggest driver of availability moving forward,” Hale said. Already, he said, the more affordable areas in the Northeast and Midwest are some of the hottest housing markets, according to Realtor.com. “Homebuyers continue to take advantage of workplace flexibility by looking for ways to lower housing costs — putting their own, personal inflation-fighting plans in place.” NAR data supports this trend, with home sales holding steady from May through June in the Northeast and falling only 1.6% in the Midwest compared to declines of 6.2% in the South and 11.1% in the West. “As mortgage rates and the prices of other goods and services continue to rise, homebuyers are likely to become even more budget-conscious,” Hale said. “This is especially true if concerns are rising about the strength of the labor market — which has so far remained resilient.”

Inventory is growing, but the market is still brisk

Although home sales have slowed back to 2019’s pace, the number of days a property is on the market before going into contract is the fastest ever at 14 days. A year ago it was 17 days and a more typical market would see properties on the market for almost 30 days. “Whenever houses are listed, they attract buyers,” said Yun, who added that buying quickly is tiring. One possible factor in the record low days on market is that buyers are trying to take advantage of their locked-in rate. “Mortgage rates have gone up,” he said. “Maybe buyers are trying to take advantage of a lower lock-in rate. That period is running out fast. They want to sign the contract and close the deal quickly.” But sellers should note that this quick time to market isn’t likely to last, Yun said. “This could be the last time we see such speed in the market.” While inventory is growing, long-term housing shortages remain, Yun said. With builders curtailing single-family construction and ramping up multi-family construction, they may be betting that more people will be penalized from buying and renting. “I don’t foresee an oversupply, even when sales slow down,” Yun said.

title: “Home Prices Hit All Time High Even As Sales Continue To Slow " ShowToc: true date: “2022-11-05” author: “Nellie Covington”

Sales of existing homes — which include single-family homes, townhouses, condominiums and co-ops — fell 5.4 percent in June from May and 14.2 percent from a year ago. June saw the lowest sales rate since June 2020, which was artificially low due to the pandemic. “The decline in housing affordability continues to weigh on potential homebuyers,” said Lawrence Yun, NAR’s chief economist. “Both mortgage rates and house prices have risen very sharply in a short period of time.” The stock, which was tight, posted its first year-over-year rebound in three years. The number of homes available for sale at the end of June was up 9.6% from May and 2.4% from a year ago. “Finally, there are more houses on the market,” Yun said. “Homes that are priced right sell very quickly, but homes that are priced too high discourage prospective buyers.”

The flight to affordable prices

Even as sales fell, home prices continued to rise, especially in some popular Sun Belt cities. Miami had the largest median price increase, up 40.1% from last year. They were followed by Orlando with a 30.6 percent increase and Nashville with a 30.6 percent increase, according to the NAR report. However, some of the same cities that saw huge price growth during the pandemic were also the places that saw the largest increase in the number of homes with price reductions in June. Austin led the way, followed by Phoenix and Las Vegas. While rising inventory will ease pressure on prices, mortgage rates are rising, reducing buyers’ purchasing power. It remains to be seen which factor will have the biggest impact on home sales, said Danielle Hale, chief economist for Realtor.com. “I expect affordability will be the biggest driver of availability moving forward,” Hale said. Already, he said, the more affordable areas in the Northeast and Midwest are some of the hottest housing markets, according to Realtor.com. “Homebuyers continue to take advantage of workplace flexibility by looking for ways to lower housing costs — putting their own, personal inflation-fighting plans in place.” NAR data supports this trend, with home sales holding steady from May through June in the Northeast and falling only 1.6% in the Midwest compared to declines of 6.2% in the South and 11.1% in the West. “As mortgage rates and the prices of other goods and services continue to rise, homebuyers are likely to become even more budget-conscious,” Hale said. “This is especially true if concerns are rising about the strength of the labor market — which has so far remained resilient.”

Inventory is growing, but the market is still brisk

Although home sales have slowed back to 2019’s pace, the number of days a property is on the market before going into contract is the fastest ever at 14 days. A year ago it was 17 days and a more typical market would see properties on the market for almost 30 days. “Whenever houses are listed, they attract buyers,” said Yun, who added that buying quickly is tiring. One possible factor in the record low days on market is that buyers are trying to take advantage of their locked-in rate. “Mortgage rates have gone up,” he said. “Maybe buyers are trying to take advantage of a lower lock-in rate. That period is running out fast. They want to sign the contract and close the deal quickly.” But sellers should note that this quick time to market isn’t likely to last, Yun said. “This could be the last time we see such speed in the market.” While inventory is growing, long-term housing shortages remain, Yun said. With builders curtailing single-family construction and ramping up multi-family construction, they may be betting that more people will be penalized from buying and renting. “I don’t foresee an oversupply, even when sales slow down,” Yun said.