Nationally, Home Prices Decline!
Good Monday Morning!
Nationally, home prices declined 3.1% in May of this year. This was the first real decline since 2011. Locally, home prices also fell 2.7%, which is lower than nationally, but also the first real decline in years. Typically, in a slower housing market we would have seen housing prices decline much sooner than they have during the current down turn. Higher interest rates would usually drive home prices down, but the lack of home inventory both nationally and locally has kept home prices high and added to the pain that would be home buyers are suffering in todays market. If mortgage interest rates would stabilize or even better yet decline, it would take the pressure off of home prices. Future interest rates hikes by the Fed could keep our national housing market in a decline though. Only time will tell as to what direction the housing market goes. One thing for sure is that if inflation numbers remain high, the Fed will react with more interest rate hikes. The following is an article from "Realtor.com" that addresses the recent decrease in home prices.
The numbers: Sales of previously-owned homes in the U.S. rose slightly in May amid a shortage of homes for sale and high mortgage rates but the median price for an existing home fell 3.1%, the largest drop since December 2011.
Sales of existing homes in the U.S. increased 0.2% to an annual rate of 4.3 million in May, the National Association of Realtors said Thursday.
That’s the number of homes that would be sold over an entire year if sales took place at the same rate in every month as it did in May. The numbers are seasonally adjusted.
The rise in sales exceeded what economists on Wall Street were expecting. They forecast existing-home sales to total 4.25 million in May.
Compared with May 2022, home sales were down 20.4%.
Key details: The median price for an existing home fell 3.1% from last May to $396,100 this year. The drop is the largest since December 2011, when home prices dropped 3.9%.
Home prices have dropped for the fourth month in a row on an annual basis. Home-price growth peaked in May 2021, when it grew 25.2% annually.
The number of homes on the market rose 3.8% in May to 1.08 million units. That’s the lowest number of homes—particularly single-family homes—that have been on the market during the month of May, since the NAR began tracking data in 1983.
Homes listed for sale remained on the market for 18 days on average, down from 22 days in April. Last May, homes were on the market for just 16 days.
Sales of existing homes across the country were mixed–the South and West saw home sales rise, while the Midwest and Northeast saw sales dip in May.
All-cash buyers made up 25% of sales. The share of individual investors or second-home buyers was 15%. About 28% of homes were sold to first-time home buyers.
Big picture: The housing market is broadly recovering, but it’s a slow one.
Buyers are accepting the new reality of mortgage rates above 6%, but the market is still hampered by a serious shortage of homes for sale.
A separate report from Realtor.com on Thursday noted that the total number of homes for sale is likely to be at its lowest point since 2012.
While builders are filling the gap with new buildings and responding to demand from home buyers, it’s not enough to meet demand. Plus, new homes are much more expensive than resales. The median price of a new home sold in April was $420,800, nearly $25,000 higher than a previously-owned home.
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