A lack of housing inventory has represented one of the biggest problems confronting potential home buyers during the covid pandemic. Now, some progress on that front has arrived.
The inventory of homes with active listings jumped 8% in May from a year earlier, Realtor.com reports. More new listings entered the market in May than in any other month since June 2019.
To be sure, active-listed inventories remain down — fully 48.5% from May 2020, about two months into the pandemic.
And the total number of unsold homes slid 3.9% in May from a year earlier. The total number includes listings in various stages of the selling process that aren’t yet sold. The dip was smaller than the 10.1% drop in April
The data show “a major turning point in inventory,” Realtor.com economists Sabrina Speianu and Danielle Hale said in a statement.
“Sellers are fueling this turnaround in inventory. However, moderating demand is also playing a role, with pending listings declining compared to last year.
“Nonetheless, homes are still spending less time on the market compared to last year, and prices are still rising.”
That partly reflects “an increase in newly listed larger homes and slow adjustments to seller expectations,” the economists said.
Prices and SalesAs for pricing, the median home price for active listings hit an all-time high of $447,000 in May, up 17.6% from a year earlier. In April, the growth rate was 14.2%. The typical home spent 31 days on the market in May, down six days from a year earlier.
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Meanwhile, existing-home sales fell 2.4% in April from March, the third straight month of declines, according to the National Realtors Association. Sales descended 5.9% from a year earlier.
“Higher home prices and sharply higher mortgage rates have reduced buyer activity,” Lawrence Yun, NAR’s chief economist, said in a commentary.
“It looks like more declines are imminent in the upcoming months, and we’ll likely return to the prepandemic home-sales activity after the remarkable surge over the past two years.”
The 30-year fixed-rate mortgage averaged 5.09% in the week ended June 2, up from 2.99% a year ago, but down a tick from 5.1% a week earlier.
‘Welcome News’“Heading into the summer, the potential homebuyer pool has shrunk, supply is on the rise and the housing market is normalizing,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
“This is welcome news following unprecedented market tightness over the last couple years.”
With all these cross currents, what’s a potential homebuyer to do? Given that prices have risen so much, it might be prudent to wait for a correction before making a purchase.
Even for renters whose monthly payments have soared, it might make sense to put off buying a home for now.
If you’re purchasing for the long term, once you sign a mortgage, your price is locked in. But your rent is generally locked in for only a year.