In June, there was a slight increase in pending home sales, indicating a positive trend in the housing market. The median prices of existing homes reached their second highest level in the past twenty years, according to the National Association. Moreover, more buyers are now facing multiple offer situations, suggesting a high demand for homes. The Pending Home Sales Index, which predicts future home sales based on contract signings, experienced a 0.3% rise in June, marking the first increase in four months.
Lawrence Yun, the chief economist of NAR, stated that although the recovery has not fully taken place, the housing recession is now over. The presence of multiple offers indicates that there is a shortage of housing supply, leading to unsatisfied demand. To address this issue, homebuilders are increasing production and hiring more workers.
Housing inventories continue to remain at historically low levels, with a 13.6% decrease compared to last year’s already low levels. Yun emphasized that there is simply a lack of available homes for sale. NAR’s data reveals that seventy-six percent of existing homes sold in June were on the market for less than a month.
Prompt 1: Rewrite the text with a different sentence structure.
According to Yun, home buyers are currently facing limited choices, higher home prices, and higher mortgage rates. However, there may be some relief on the horizon as mortgage rate increases are expected to subside. Yun believes that with inflation stabilizing and job additions continuing, a potential decline in mortgage rates could result in a surge of buyers later this year and into the next. The National Association of Realtors (NAR) predicts that the 30-year fixed-rate mortgage could reach 6.4% by the end of this year, followed by 6% in 2024. It is worth noting that mortgage rates have been steadily climbing in recent weeks, reaching around 7%, a significant increase from the historically low rates of 2% or 3% seen just over a year ago.
There has been a release of the most recent forecast outlining the projected trajectory of the market in the upcoming months. According to their predictions, existing-home sales are expected to decline by 12.9% in 2023 compared to 2022, followed by a 15.5% increase in 2024.
In terms of prices , we anticipate that national median existing-home prices will remain relatively stable, with a slight decrease of just 0.4% by the end of this year compared to 2022. The projected median price for 2023 is $384,900. However, there is optimism for a rebound in 2024, with an estimated increase of 2.6% to reach $395,000. It is worth noting that the West, which is known for its higher prices, is expected to experience more significant reductions, while more affordable regions like the Midwest are predicted to see moderate increases.
On the other hand, sales of newly constructed homes are expected to be a positive aspect of the housing market, as more buyers seek greater inventory options. NAR forecasts a rise of 12.3% in new-home sales in 2023, followed by another increase of 13.9% in 2024. The national median price for new homes is projected to decrease by 1.9% this year to $449,100, before experiencing a 4.2% jump in 2024 to reach $468,000.
Regarding housing construction, economists have been emphasizing the need for the new-home market to compensate for the supply deficits in the real estate market. However, NAR predicts a 5.2% decline in housing starts in 2023 compared to 2022, reaching 1.47 million. Nevertheless, there is optimism for a rebound in 2024, with an expected increase of 5.4% to 1.55 million.
NAR emphasizes the importance of expanding the housing supply to enhance access to homeownership for more Americans. The level of inventory brought to the market will significantly impact home prices. Increased homebuilding is expected to moderate price growth, while limited construction will likely result in home price appreciation surpassing income growth, as stated by Yun.
Regional Distribution of Contract Signings.
In contrast to the previous year’s rapid pace driven by the pandemic, the current state of the housing market indicates a significant slowdown. According to data from NAR, pending home sales in June were down by 15.6% compared to the previous year. However, the market performance varied across different regions. While contract signings increased in the Northeast and Midwest on a monthly basis, they declined in the South and West. Despite these regional differences, all four major regions of the United States experienced a decrease in transactions compared to the previous year in June.
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