JULY Market Update - Housing Inventory Rising but Sales Slowing
June was another double-digit month for both sales and prices in the state. COVID cases have started to rise again and buyer fatigue continues to push sales down from 15-year highs. However, rates have started to ease modestly and that may combine with slightly more inventory in coming weeks to fuel a rebound in potential homebuyers.
US Existing Home Sales Bounced Back
Home prices remained on an upward trend, with the national median price up 23.4% from last June to $363,300. First-time buyers accounted for 31% of sales, while investors or second-home buyers’ share went down to 14% in June.
Weekly Sales Trend Down as Seasonality Kicks in California home sales declined on a year-over-year basis for the second time in three months, with the latest weekly sales dipping from the same time last year by 8.9%, the largest in 57 weeks. Pending sales, meanwhile, dropped 7.6% from a year ago as the market slowly transitions into the off-season. The number of total active listings available for sale on the MLS has been rising for the past few weeks consecutively. This means that homebuyers will see more options when they conduct their home search and this trend is likely responsible for the slight uptick in time on market and the very modest reduction in competitiveness we’ve seen over the past few weeks.
Rates declined again as concerns about the Delta variant continued to create uncertainty on the pace of the economic recovery. 30-year fixed-rate mortgages (FRM) averaged 2.78% in the week ending July 22, a decline from 2.88% in the prior week. Mortgage rates for 15-year FRM loans averaged 2.12% in the latest week, hitting an all-time low since 1991.
With mortgage rates staying near record-low levels,, the demand for housing could remain elevated in the next couple months if the supply side further improves. While new construction will likely remain constrained due to high costs of building materials and labor shortage, the latest statistics from various reports suggest that more sellers are listing their homes as the economic recovery continues but will the increase in housing supply be big enough to keep the momentum going?
- Information from California Association of Realtors - Weekly Market Update