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Existing home sales will decrease by 2% as first-time buyers get price cuts

According to the National Association of Real Estate Agents, sales of previously owned homes fell 2% from July to August to a seasonally adjusted annual rate of 5.88 million units.

Sales were down 1.5% from August 2020 with the first annual decline. However, sales are still above pre-pandemic levels.

These numbers are the number of home closures and are based on contracts that are likely to have been signed in June and July.

“The housing sector is clearly calming down,” said Lawrence Yun, chief economist at the National Association of Realtors, who called last year’s surge “abnormal.”

As of the end of August, the supply of housing for sale was 1.29 million units, down 1.5% from the previous month. Inventories have fallen 13% compared to August 2020, but the comparison has been steadily shrinking for several months. At the current sales pace, there was a 2.6 month supply.

“Probably, we expect more inventories to increase as the moratorium on eviction of peasants ends,” Yun said.

Due to tight supply, the median existing homes sold in August were $ 356,700, up 14.9% from August 2020.

The median is also distorted by stronger activity at the high end of the market. Sales of homes under $ 250,000 were down compared to a year ago, while sales of homes over $ 1 million surged 40%.

First-time buyers are clearly suffering from price increases, dropping to just 19% of total sales, the lowest since January 2019. Historically, first-time buyers typically make up 40% of buyers.

Yun said the market is generally less competitive as buyers’ traffic is declining and the number of buyers abandoning inspections, a competitive tactic, is also declining. The number of typical home offers went from 4.5 a month ago to 3.8.

According to Mortgage News Daily, mortgage rates began to fall from 3.25% in June, hitting a low of 2.78% in the popular 30-year period fixed by early August. This decline was most helpful to first-time buyers, as they tend to be the least financially volatile and most sensitive to interest rates, but obviously they haven’t helped enough.

According to the U.S. Census, July new home sales were based on signed contracts rather than closures, consistent with the latest existing home sales, with a slight monthly increase, but 2020. It decreased by 27% from July of the year. ..

Construction companies are raising prices to keep up with soaring land, labor and materials. Recent revenue reports and guidance from some of the country’s largest builders focus on supply chain issues that disrupt production and lead to fewer new home closures.

Existing home sales will decrease by 2% as first-time buyers get price cuts

Source link Existing home sales will decrease by 2% as first-time buyers get price cuts

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