The low volume of available houses has created the worst housing markets since the height of the last major financial crisis.
Key Details
- New data from the National Association of Realtors shows that June pre-owned home sales dropped 3.3% from May to June, with just 1.08 million homes available for sale by the end of last month.
- The numbers reflect an 18.9% decrease in sales over the past 12 months and the lowest sales for the month of June since 2009—amid the financial crisis.
- The decline in sales is not due to low demand but due to too much demand, with low supplies choking the market, CNBC reports.
- The high demand has spiked the cost of new and used homes—equally costing an average of $416,000, Axios reports.
- Average homeowners continue to be incentivized to hold onto lower mortgage rates as long as they avoid selling their homes, as we previously reported.
Why It’s Important
The real estate market remains in a curious spot. Demand for housing has spiked since the summer of 2020, with millions of Americans taking advantage of remote work to migrate to new states with lower taxes, larger properties, and better opportunities for raising a family. The recent economic downturn, high-interest rates, tightening job market, and increasing inflation have failed to curb this high demand.
As we previously reported, this demand has contributed to a volume crisis. Popular cities like Dallas, Texas, Nashville, Tennessee, and Tampa, Florida, have seen the volume of new and used houses rapidly decrease as millions of people move to these states and hunt for a small number of increasingly expensive homes.
Unfortunately, market forces are unlikely to alleviate this situation in the immediate future, as any influx in available new properties will immediately set off a chain reaction of higher demand that will likely keep many families in their current homes for the foreseeable future.
“There are simply not enough homes for sale. The market can easily absorb a doubling of inventory. Home sales fell, but home prices have held firm in most parts of the country … Limited supply is still leading to multiple-offer situations, with one-third of homes getting sold above the list price in the latest month,” Realtors chief economist Lawrence Yun tells CNBC.
