Home prices are soaring, and mortgage rates are roaring. Is there any good news for prospective home buyers?
Believe it or not, the answer is yes. Home inventories are on the rise, increasing an annualized 18.7% in June, according to real estate services firm Realtor.com. That’s a record for Realtor.com data going back to 2017. It was the second straight monthly increase.
“This turnaround in inventory is being driven by both sellers entering the market and by moderating demand,” Realtor.com economists Sabrina Speianu and Danielle Hale wrote in a commentary.
“Newly-listed homes entered the market at a higher rate (up 4.5% year-over-year) than in the recent past,” they said.
Meanwhile, “moderating demand has taken a larger toll this month, with pending listings declining sizably (down 16.3%) compared to last year,” they said.
“Nonetheless, homes are still spending less time on the market compared to last year and prices are still rising, partially driven by an increase in newly-listed larger homes and slow adjustments to seller expectations.”
Bigger Homes: An ‘Opportunity’
Those bigger homes represent “opportunities for move-up buyers, as newly-listed homes skewed larger,” Hale said. “This first wave of supply improvements may be particularly opportune for summer sellers looking to upgrade from their starter homes.”
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Looking forward, “while we anticipate that more inventory will eventually cool the feverish pace of competition, the typical buyer has yet to see meaningful relief from quickly selling homes and record-high asking prices,” Hale said.
The median existing-home sale-price hit $407,600 in May, up a hefty 14.8% from May 2021, according to the National Association of Realtors. That marks 123 consecutive months of year-over-year increases.
Mortgage rates are jumping too. The 30-year fixed-mortgage rate averaged 5.81% as of June 23, according to Freddie Mac, hitting a near-14-year-high.
Home (Un)affordability
Put together, the price and mortgage-rate increases have made buying a home simply unaffordable for many Americans.
The national median mortgage payment totaled $1,897 in May, up a whopping $513, or 37%, from the beginning of the year, according to the Mortgage Bankers Association.
This lack of affordability is sending many would-be home buyers to rentals. A total of 74% of single-family home landlords said in May that they expect continued strong leasing activity over the next six months, according to a survey from John Burns Real Estate Consulting, cited by The Wall Street Journal.
Of course, the strong demand for rentals is making many of them unaffordable too. Single-family home rents surged a record 14% in the 12 months through April, according to CoreLogic. That’s the 13th straight month of all-time highs.
For most of us, all this means we have no choice but to pay more for our housing, unless you already own a home and are content to stay there.