If the pandemic housing market was tough for buyers, the post-pandemic housing market might be even tougher.
The median existing-home price climbed for six-straight months in June to $410,200, the second-highest price of all time and down just 0.9% from the record-high of $413,800 in June 2022, according to data released Thursday by the National Association of Realtors.
Not only that, 33% of homes on the market had multiple offers.
Historically low levels of inventory, down 14% from one year ago, is contributing to rising prices despite elevated mortgage rates, say experts.
“There are buyers competing for limited properties out there,” says NAR Chief Economist Lawrence Yun. “If some consumers, perhaps mistakenly, heard about a housing recession, they’re finding out is that it is a tough market to be a buyer in the current environment.”
Housing:Analysis: Will home prices this year surpass peak-pandemic prices?
Housing inventory at historic lows
Single-family inventory, at 960,000, was the lowest for month of June since the association began tracking the data in 1982.
The total housing inventory at the end of June was 1.08 million units, while unsold inventory sits at a 3.1-month supply, up from 3.0 months in May and 2.9 months in June 2022.
“There are simply not enough homes for sale,” says Yun. “The market can easily absorb a doubling of inventory.”
Elevated mortgage rates
The 30-year fixed-rate mortgage averaged 6.96% as of July 13, according to Freddie Mac. That’s up from 6.81% the previous week and 5.51% one year ago.
One of the main reasons for the limited supply of homes has been the sub-5% mortgage interest rates that 85% of current mortgage holders are locked in to, which discourages current homeowners from selling their home and buying another at today’s elevated interest rates.
So even if a homeowner wanted to make a lateral move (buy a similar priced home in a different location), they’d have to pay $1,000 more per month given the current mortgage rates, says Yun.
Low homes sales
Not surprisingly, pace of home sales slowed down considerably in June, dropping 19% compared to the same time last year.
Total existing home sales, transactions that include single-family homes, townhomes, condominiums and co-ops – receded 3.3% from May to a seasonally adjusted annual rate of 4.16 million in June.
Sales are down 23% from first half of last year to first half of this year.
The pent-up demand will kick into gear if mortgage rates and inventory move favorably, said Yun.
“Despite slower sales activity, there were an estimated 4.16 million home sales on an annualized basis in June, and the housing recession that was predicted by some simply has not materialized,” says Lisa Sturtevant, chief economist for BrightMLS. “With positive inflation news and a strong labor market, the possibility that the Fed will be able to bring the economy in for a “soft landing” is improving.”
Other housing insights
First-time buyers were responsible for 27% of sales in June, down from 28% in May and 30% in June 2022.
All-cash sales accounted for 26% of transactions in June, up from 25% in both May 2023 and June 2022.
Individual investors or second-home buyers, who make up many cash sales, purchased 18% of homes in June, up from 15% in May and 16% the previous year.
Distressed sales– foreclosures and short sales – represented 2% of sales in June, unchanged from last month and the prior year.