U.S. home prices continued to fall year-on-year in June, which may not be too reassuring for homebuyers. Even after the drop, the June median reached its all-time high. Second Highest Monthly Median Price The record dates back to 1999, according to a National Association of Realtors report released Thursday.
Last month, the median resale home price was $410,200, down just 0.9% from a year earlier. record high From $413,800 a year ago. It was the fifth month that median home sales prices fell year-on-year.
The inventory of homes on the market remains historically low as current homeowners refuse to sell and cling to ultra-low mortgage rates that could be less than half of current rates.
“There is simply not enough housing available for sale,” said Lawrence Yun, chief economist at the NAR. “The market could easily absorb the doubling of inventories.”
Sales of existing homes, including single-family homes, townhomes, condominiums and co-ops, were weaker than expected, dropping 3.3% from May to June. Annual sales fell 18.9% year-on-year, and the seasonally adjusted annual sales pace fell from 5.13 million units a year earlier to 4.16 million units in June.
“Relatively high mortgage rates of nearly 7% and historically low inventories of existing homes on the market are hampering sales activity,” Yoon said.
June sales were the slowest since January and the slowest for June (usually the busiest month of the year) since 2009.
mortgage interest rate remain unstable — So far this year, average interest rates have ranged from 6.09% to 6.96%. Interest rates were fairly stable in June, but rose in May when some of the home sales that ended in June should have reached contracts.
“The first half of the year was definitely down, with sales down 23%,” Yoon said. “Despite the usual life-altering conditions, few Americans were moving.
house prices still high
One reason house prices are so high is because it’s summer.
Because house prices fluctuate seasonally, with summer prices tending to be higher than winter prices, economists usually focus on year-over-year changes in prices, comparing January to January of the previous year and June to June of the previous year.
On this monthly year-over-year basis, the median home price in the NAR is depressed since february, when prices fell below the previous year for the first time in more than a decade. However, June’s 0.9% annual decline was far less than the 3.1% annual decline in May, the biggest year-on-year decline since December 2011.
And while economists don’t rely on month-to-month comparisons because the variability is too great, buyers can see that the median price of the NAR has risen each of the past five months, even though it has fallen year-on-year.
But Yoon points out that it will inevitably happen from month to month, depending on the seasonality of the market.
“Median home prices rise in the spring and summer, as larger homes are sold as families move during this time,” said Yoon.
The main reason for the high price is historically low inventories. And while there are fewer buyers on the market, they are still competing for the same handful of homes on the market.
As a result, 33% of homes sold in June were above list price, a phenomenon synonymous with bidding wars.
One small consolation is that the percentage of homes sold in the bidding war isn’t as high as last year, when 51% of properties were above asking price.
“It’s not very competitive right now, but by historical standards, it’s a tough market for buyers,” Yoon said.
housing supply is tight
Especially in the following areas, the supply of affordable housing is low. Affordable price in a popular locationkeeping sales low and prices high.
According to the NAR, the total number of housing units in stock stood at 1.08 million at the end of June, the same as in May but down 13.6% from a year ago. Yun said there were nearly twice as many homes in the market before the pandemic.
At the current sales pace, there are 3.1 months of unsold inventory, up from 3 months in May 2022 and 2.9 months in June.
Yoon said the ratio of existing homes for sale to new homes for sale is typically 5:1, and the new homes for sale inventory is solid at about 5:1. 428,000 in May At slightly over 1 million existing homes, the ratio approaches 2:1.
Yoon said the biggest change in the market to shake up the slack in inventories would be lower mortgage rates. Some experts say it will take time. Interest rate 5.5% This is to help homeowners feel comfortable giving up low interest rates.
“Homeowners love the 3% interest rate when they buy or refinance,” says Yun. “Even if you bought a house for the same price, your monthly payments would increase by about $1,000. If the pain of giving up that 3% wasn’t so bad, more people would be willing to sell.”
Efforts to build new homes and convert unused office space into housing to support the housing supply are continuing, but it will take years before they are ready for use, Yoon said. But he said there are some adjustments to housing policy that could free up some of the housing inventory in the short term.
He said he wants to consider a temporary capital gains tax relief program for investors who sell properties to specific categories of buyers, such as first-time homebuyers.
“There are about 20 million single-family rental properties owned by single-family investors, and some may take the opportunity to sell with tax incentives,” he said.
https://www.ocregister.com/2023/07/20/us-home-prices-stay-near-record-high-even-as-sales-drop-in-june/ Home Prices Remain Near All-Time Highs Despite Lower Sales in June – Orange County Register