Existing-home sales grew by 2.0% in July from the month prior, a report published by the National Association of Realtors on Monday found. But first-time homebuyers are still getting squeezed.
Completed sales transactions for single-family homes, townhomes, condominiums and co-ops, represented a seasonally adjusted annual rate of just under 6 million (5.99 million) in July, according to NAR. A year ago, the annual rate was 5.90 million, so sales grew year-over-year by 1.5%.
A notable development: After a year of extremely tight housing inventory, the housing market is showing signs of finally adding housing stock. The inventory of unsold homes rose by 7.3% to 1.32 million from June to July, the report found. However, even with the availability of more homes on the market, inventory for homebuyers is down 12% from 2020 (1.5 million).
Lawrence Yun, chief economist at NAR, said in a statement that as inventory starts to tick up, the intensity of multiple offers will lessen, leading to a more balanced housing market for homebuyers.
“Much of the home sales growth is still occurring in the upper-end markets, while the mid-to lower-tier areas aren’t seeing as much growth because there are still too few starter homes available,” Yun added.
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Reacting to the report, Matthew Speakman, an economist at Zillow, noted that demand continues to be firm and is “boosted, in part, by gains in inventory that are starting to offer buyers meaningfully more choice.”
Speakman said that the increase in inventory is being driven by “sellers [coming] out of the woodwork, providing home shoppers with more options, and likely easing some of the upward pressure on home prices in coming months.”
Meanwhile, the median existing-home sales price rose to $359,900 in July, up from $305,600 last year, marking a 17.8% increase, the report said.
Yun remarked that home prices are unlikely to drop in the coming months, though there is a chance that “they will level off as inventory continues to gradually improve.”
He also said that the elevated cost of housing is having an impact on the rental market, with prospective homebuyers who are priced out of the current purchase market opting to rent, thus causing rental rates to jump.
Per the report, first-time homebuyers accounted for 30% of sales in July, dipping slightly from 31% in June and down from 34% year-over-year, NAR said.
Joel Kan, associate vice president of economic and industry forecasting at the Mortgage Bankers Association, said that first-time homebuyers have been “particularly sensitive to these elevated prices.”
“[First-time homebuyers] are also competing with an elevated share of cash buyers – up to 23% of all buyers compared to 16% a year ago,” Kan said.
Also, due in part to the foreclosure moratorium still in place in July, distressed sales, encompassing foreclosures and short sales, represented less than 1% of sales, equal to the percentage seen in June and equal to July 2020, NAR said.