These two stats show just how tight the US housing market was last year
Historically, the US housing market has been unaffordable, and home sales and inventory remain low.
Data from the National Association of Realtors shows existing home sales fell 16.6% from last July.
At the same time, the total housing stock decreased by 14.6% compared to last year.
Americans face a The housing market has historically been unaffordable Thanks in part to high Federal Reserve interest rates and a decade of undersupply of homes across the United States.
Home prices have remained stubbornly high even with mortgage rates hovering near a two-decade peak, and confusing supply-and-demand dynamics have left economists divided. forecast for next year And beyond.
Existing homeowners who locked themselves in at low mortgage rates during or before the pandemic are now unwilling to move. This throws both supply and demand out of the market, and leaves other home hunters–faced with higher new rates–marginalized with fewer options.
Two key stats show just how narrow the landscape has been over the past 12 months.
First, total existing home sales fell 2.2% in July to a seasonally adjusted rate of 4.07 million, according to a report Tuesday from National Association of Realtors.
Two percentage points may not seem significant, but the number is down year-over-year by 16.6%. Last July, existing home sales totaled 4.88 million.
The second statistic relates directly to the home sales numbers; The total housing stock is down 14.6% year-over-year, according to NAR.
“Two factors are driving current sales activity – inventory availability and mortgage rates,” NAR chief economist Lawrence Yoon said Tuesday. “Unfortunately, both were unfavorable to buyers.”
At the end of July, there were 1.11 million units registered, per NAR, for the total housing stock. That’s 3.7% higher than June, but still a much lower reading than last July, when there were 1.3 million units registered.
At the current pace of sales, the housing market offers 3.3 months of unsold inventory supply, up from 3.1 months in June and slightly higher than the 3.2 months we saw last July. Strategists at Goldman Sachs Don’t expect the lack of affordability to change anytime soon.
In an August note, they cited inventory hurdles as one of the reasons for a 1.8% increase in house prices in 2023. They revised an earlier forecast of a 2.2% decline in house prices.
“New listings are being added at the lowest pace ever, which is a net positive uptake even amid minuscule order volume,” Goldman Sachs said.
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