Down payment? Check. Good credit? Check. Pre-approved for a mortgage? Check. There’s just one problem for would-be home buyers: there simply aren’t enough properties for sale.
The shortage of houses on the market was to blame for the number of existing homes sold, about 5.44 million. That figure is a dip of 1.3% from June to July, according to the seasonally adjusted numbers in a recent National Association of Realtors® report. But sales of the previously been-lived-in homes were still up 2.1% from July of 2016.
We are seeing sales slow. [However,] it’s not like this huge market slowdown,” says realtor.com’s Chief Economist Danielle Hale.
So no one should panic. But on top of fewer homes available, buyers face another obstacle.
“We’ve had more than five years of prices increasing. That’s an added challenge for buyers, especially first-time buyers,” Hale says.
The median price of an existing home in July was $258,300. That’s down nearly 1.9% from an all-time high in June, but was still up 6.2% over July of 2016. Ouch! That means it’s becoming ever more difficult for buyers to save up for down payments.
“The economy is definitely better. We see jobs continue to be added,” Hale says. “[But] incomes are going up about 2%. Homes are going up about 6% year-over-year.”
The good news for cash-strapped buyers is that existing homes were significantly cheaper, by about 21.4%, than newly built abodes. The median price of a new home was $313,700 in July, according to a joint report by the U.S. Census Bureau and U.S. Department of Housing and Urban Development. That’s due to high labor and land costs.
But sales of existing single-family homes still slipped 0.8% from June to July, but rose 1.7% year-over-year. Monthly condo and co-op sales tumbled even more by 4.8%, but were up 5.3% from July of 2016.
Existing home sales were down the most in the Northeast where they plummeted 14.5% from June to July. They also dipped 1.5% from July of 2016. The median price of a home in the region was $290,000. In the Midwest, they also fell 5.3% month-over-month and dropped 1.6% year-over-year. The region had the lowest median price in the nation at $205,400.
However, sales rose in the South and the West. In the South, sales were up 2.2% from June to July and increased 3.6% annually. The median price of a home in the region was $227,700. In the West, the most expensive region, they ticked up 5% both month-over-month and year-over-year. The median price of a home there was $373,000.
“Buyer interest in most of the country has held up strongly this summer and homes are selling fast,” NAR’s Chief Economist Lawrence Yun said in a statement. “But the negative effect of not enough inventory to choose from and its pressure on overall affordability put the brakes on what should’ve been a higher sales pace.”