Housing supply catches up with demand
Prices expected to balance out month to month
Those fearing the housing bubble apocalypse can finally breathe — it looks like home prices may begin to move laterally on a month-over-month basis moving forward.
While the median cost per square foot rose 14.9% year-over-year in July, inventory fell by almost 16% in the same period. Meanwhile, on a monthly basis, the median list price per square foot held steady from June to July, while the number of homes listed for sale increased.
The stagnant list price month-over-month is an indicator that the inventory supply is beginning to catch up with demand, according to the latest report from Movoto Real Estate.
Higher mortgage rates coupled with increased inventory will stunt price appreciation, slowing the quickly rising pace of home prices.
This goes hand-in-hand with the latest CoreLogic (CLGX) Case-Shiller report which states that slowly, as more and more homeowners consider selling their homes to lock in capital gains, the pressure that has been driving prices upward will subside. The report predicted that price appreciation will start to decelerate in 2014.
Currently, the real estate market is mixed, the report suggests. While sellers would be smart to list their homes in order to take advantage of the increase price per square foot, homebuyers would be wise to keep an eye on the monthly change in list price per square foot. June to July marked the first time this year that the price did not increase, which could imply the market is loosening, putting more power back into the hands of buyers, Movoto noted.
In 36 of the 38 cities tracked by Movoto, the median list price per square foot increased, up 14.9% year-over-year. The July 2012 median list price per square foot sat at $157; at the end of July, the median price jumped to $181.
However, before July, the median list price per square foot rose for six consecutive months, a negative sign for potential buyers looking to strike a deal. Fortunately for buyers, July put a stop to the price increase. While this is a good sign for homebuyers, data from Movoto indicated that there has been little change in the price between June and July over the past two years.
Inventory remained significantly below year-ago levels, down 16.2% from July 2012. However, on a monthly basis, inventory rose slightly more than 4% from June to July. According to Movoto, this is to be expected upon entering the busy part of the home-buying season when buyers are more likely to buy a home.
“To place this in perspective, during the same time in 2012 and 2011, inventory declined across the cities we track, which is a good sign for perspective buyers going into the second half of this year,” Movoto wrote in the report.