[ad_1]
For over a year now, the real estate market has been a perfect storm for sellers, but the winds may finally turn.
Strong demand and low supply are starting to ease, and mortgage rates are falling from their recent highs. While home prices continue to climb, these new market dynamics will likely dampen some of those gains as well.
New home listings jumped 4% in the four-week period ending July 4 compared to the same period a year ago, according to Redfin. They increased by 3% compared to the same period in 2019. It was the first time that the new supply exceeded pre-pandemic levels.
The number of active listings is still down 32% from a year ago, but it is actually the smallest annual drop since early February. Active registrations are now up 8% from their 2021 low in early March.
“Many buyers have pulled out of the housing market and are waiting for more and better homes to be listed,” said Daryl Fairweather, chief economist at Redfin. “Buyers don’t have the same sense of urgency they did at the start of the year. They don’t rush to buy before prices rise, because asking prices have already risen and stabilized.”
A monthly housing sentiment survey conducted in June by Fannie Mae found that 64% of those polled said it was a bad time to buy a home, up from 56% in May. Regarding selling, 77% of those surveyed said it was a good time to sell, up from 67% in May.
Potential sellers had taken properties off the market, not wanting people to come to their homes while the pandemic raged. They were also worried that they would not be able to find something else to buy.
Vaccines, along with increased stocks, give them more confidence, not to mention the fact that they can now sell for better prices. A record 55% of homes sold above the listing price in June, up from 27% the year before.
Home prices rose 15.4% in May from May 2020, according to CoreLogic. However, CoreLogic economists predict that prices will rise 3.4% by May 2022 as affordability issues hit some buyers and cause price growth to slow.
“First-time buyers are hitting a wall in many places across the country as the pace of rising home prices outweighs the benefits of falling borrowing costs. Young people and first-time buyers, including millennials, face the challenge of saving money for a down payment, closing costs and cash reserves, ”said Frank Martell, President and CEO of CoreLogic.
Mortgage rates, while historically low, have been on a roller coaster of late, starting the year at an all-time high, then rising again at the end of March. Last week they fell back and while they are expected to increase slowly over the long term, there does not appear to be any fear of another spike looming.
“They [buyers] don’t rush to buy until mortgage rates rise because rates have fallen below 3% and are expected to stay low. With more and more new announcements entering the market, buyers who have thrown in the towel may want to watch again as the market leans more in their favor, ”added Fairweather.
Consumers also feel better about the economy and their own personal wealth. This could inspire buyers who can afford a new home but have so far chosen to remain tenants.
“Despite the pessimistic home buying conditions, we expect housing demand to persist at a high level for the remainder of the year,” said Doug Duncan, chief economist at Fannie Mae.
“Mortgage rates are not staying too far from their all-time lows, and consumers are expressing even greater confidence in their household income and work status compared to the same time last year, when the pandemic hit. shut down large swathes of the economy, ”Duncan said.
[ad_2]
Source link