Continued strong demand pushed the median US home price to an all-time high in June, although the national home-buying frenzy cooled slightly as supply increased.
Existing home sales rose 1.4% in June from the previous month to a seasonally adjusted annual rate of 5.86 million, the National Association of Realtors said Thursday. June sales increased 22.9% from the previous year.
Separate labor market figures have shown that the number of people receiving unemployment benefits has fallen to the lowest level since the start of the pandemic, with states withdrawing from participation in federal pandemic relief. Initial demands, on the other hand, increased due to persistent supply constraints in the automotive industry.
The boom in the real estate market is moderating slightly as higher prices encourage more homeowners to list their homes. Homes sold in June received an average of four offers, up from five the month before, said Lawrence Yun, chief economist of NAR.
But the number of homes for sale remains well below normal, and strong demand due to ultra-low mortgage interest rates should continue to push home prices up.
As more homes hit the market, they are quickly bought by buyers, said Robert Frick, a business economist at the Navy Federal Credit Union.
“Demand trumps everything,” he said. “The increase in inventory is not going to slow down the price increases. “
Many homes sell for above the listing price and receive multiple offers. The typical home that sold in June was on the market for 17 days, maintaining an all time high, NAR said.
Dana Laboy and John Niehaus of Columbus, Ohio, started shopping in February for a home costing $ 400,000 or less, but they increased their budget after losing several deals, Ms. Laboy said.
“When we were losing homes left and right every weekend for eight weekends in a row, it was very demoralizing,” Ms. Laboy said. “I didn’t think we would offer up to $ 40,000 more and still not get it, as we have in some cases. “
The couple’s rental lease ended in March and they moved in with Mr Niehaus’s parents while continuing to search for accommodation. They bought a three bedroom house in June for $ 447,200.
At the end of June, 1.25 million homes were for sale, up 3.3% from May and down 18.8% from June 2020. At the current rate of sales, there was a supply of 2.6 months of housing on the market at the end of June.
Market watchers expect the real estate frenzy to continue to subside over the next few months as the number of homes for sale increases and high prices force some buyers to exit the market.
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“I don’t believe you will see the kind of [price] increases you’ve seen over the past 12 months, ”said Sheryl Palmer, general manager of home builder Taylor Morrison Home Corp. “It’s not sustainable.
First-time buyers or those who can only afford small down payments find it most difficult to compete. More than half of existing home buyers in June who used mortgages to buy a property put in at least 20% less, according to a NAR survey. Buyers also make their offers stand out in this competitive market by agreeing to buy homes without contractual terms that typically protect buyers, such as inspection requirements.
Alex Wolf and Maggie Jasper bought a two-story home in suburban Denver in June after a few months of hunting. Mr. Wolf and Ms. Jasper did not waive the home inspection requirement in their offerings, which made it harder to compete.
“I’m not prepared to take that many risks,” Mr. Wolf said. “We had a lot of things against us so we were very lucky. “
Existing home sales grew the most month over month in the Midwest, up 3.1%, and in the Northeast, up 2.8%.
Sales were particularly strong at the high end of the market. Sales of homes priced above $ 1 million more than doubled in June from a year earlier, according to NAR.
Construction activity has increased due to strong demand, but home builders are constrained by the availability of labor, the supply of land and the costs of materials. A measure of homebuilder confidence in the United States fell in July, the National Association of Home Builders said this week.
Housing starts, a measure of US home construction, rose 6.3% in June from May, the Commerce Department said earlier this week. Residential permits, which can be an indicator for future home construction, fell 5.1%.
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Write to Nicole Friedman at [email protected]
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