Sky-High Home Prices Shatter Ceiling Again
July 23, 2018
Ongoing inventory shortages helped to push the median sale price for existing homes to another all-time high in June, the National Association of REALTORS® reports. The median price for all housing types was $276,900, surpassing a previous record set in May. Home prices have surged 5.2 percent since a year ago.
The mix of low inventory and high home prices may have had influence on existing-home sales in June, which fell for the third consecutive month. Total existing-home sales, which include completed transactions for single-family homes, townhomes, condos, and co-ops, declined 0.6 percent to a seasonally adjusted annual rate of 5.38 million. Sales are now 2.2 percent lower than a year ago, with drops in the South and West offsetting gains in the Northeast and Midwest.
“There continues to be a mismatch since the spring between the growing level of homebuyer demand in most of the country in relation to the actual pace of home sales, which are declining,” says NAR Chief Economist Lawrence Yun. “The root cause is without a doubt the severe housing shortage that is not releasing its grip on the nation’s housing market. What is for sale in most areas is going under contract very fast and, in many cases, has multiple offers. This dynamic is keeping home price growth elevated, pricing out would-be buyers and ultimately slowing sales.”
Here’s a closer look at key indicators from NAR’s June housing report:
- Inventory: Total housing inventory rose 4.3 percent to 1.95 million existing homes available for sale, which is 0.5 percent higher than a year ago. That marks the first year-over-year increase since June 2015. Unsold inventory is at a 4.3-month supply at the current sales pace.
- Days on the market: Fifty-eight percent of homes sold in June were on the market less than a month. Properties, on average, stayed on the market for 26 days, down from 28 days a year ago. “It’s important to note that despite the modest year-over-year rise in inventory, the current level is far from what’s needed to satisfy demand levels,” Yun says. “Furthermore, it remains to be seen if this modest increase will stick given the fact that the robust economy is bringing more interested buyers into the market and new-home construction is failing to keep up.”
- First-time buyers: First-time buyers comprised 31 percent of sales, down from 32 percent a year ago.
- All-cash sales: All-cash transactions made up 22 percent of transactions, up from 18 percent a year ago. Individual investors account for the biggest bulk of cash sales. Investors comprised 13 percent of home sales in June, unchanged from a year ago.
- Distressed sales: Foreclosures and short sales made up 3 percent of sales, the lowest since NAR began tracking such data in October 2008. Distressed sales are down 4 percent from a year ago. Broken out, 2 percent of sales were foreclosures, and 1 percent were short sales.
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Updated: October 18, 2018