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The real estate sector is experiencing increased competition in suburban markets. Grady Trimble from FOX Business with more.
There aren’t enough homes for sale, and as a result, pending home sales plunged 10.6% in February, marking the second consecutive month of declines, according to the National Association of Realtors. After eight consecutive months of year-over-year gains, pending home sales in February fell 0.5% year over year.
HOME AWARD TO SEE THE BIGGEST JUMP SINCE 2014
The data comes as home inventory hit a record 1.03 million units at the end of February, down 29.5% year-over-year from 1.46 million units, marking the largest annual decline since NAR began collecting home inventory data in 1982. At the current rate of sales, it would take two months to exhaust supply, slightly above 1 , 9 months in January but below 3.1 months recorded a year ago.
However, housing demand is strong with properties selling after an average of 20 days on the market, the fastest pace on record, down from 21 days in January and 36 days in February 2020.
Home prices are also accelerating at a record pace, with the S&P CoreLogic Case-Shiller National Home Price Index rising 11.2% in January, up from 10.4% in the previous month, the highest annual growth rate since February 2006. The Case Shiller The 20 Cities Index posted an 11.1% year-over-year gain, up from 10.2% the previous month, the biggest jump since March 2014, while the The index of the 10 cities recorded an annual increase of 10.9%, against 9.9% in the previous month.
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“The demand to buy a home is rampant, multiple offers prevail and the days to market are quick, but deals don’t click due to record inventory,” the economist said. NAR chief, Lawrence Yun. “Only the high-end market is seeing more activity due to a reasonable supply.”
He also noted that demand does not appear to be affected by the recent hike in mortgage rates. The average rate on a 30-year fixed mortgage rose to almost 3.2% last week, the highest since June, from 3.1% the week before. It’s still below the pre-pandemic rate of 3.5%
Even with rising mortgage costs, Yun expects rates to remain relatively low at no more than 3.5% in 2021, which is “still beneficial to both potential buyers and current homeowners considering to refinance ”.
Homes priced over $ 250,000 have been a big boost to home sales across the country in recent months, but Yun believes homes priced over $ 500,000 and under $ 1 million are starting to experience similar low inventory issues.
“Potential buyers may need to expand their geographic search areas, given the current tight market,” Yun added. “If there were more inventory to choose from – ideally a five or six month supply – then more buyers would be able to buy properties affordably.”
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Each of the four major regions of the United States experienced month-over-month declines in February, while results were mixed in regions year over year.
In the Northeast, pending home sales fell 9.2% month over month and 3.9% year over year, while the Midwest fell 9 , 5% month over month and 6.1% year over year. Meanwhile, pending home sales transactions in the south fell 13% month-over-month, but grew 2.9% year-over-year and the region’s l West fell 7.4% month over month, but rose 1.9% year over year.
The Associated Press contributed to this report.
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