Housing inventory sees first annual increase since 2015
Housing inventory saw its first year-over-year increase in three years while pending home sales snapped a two-month slump in June.
The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose by 0.9 percent to 106.9 last month, according to the National Association of Realtors. Contract signings are still down 2.5 percent annually, however.
While pending home sales only saw a marginal increase, total housing inventory went up significantly during June. Inventory rose by 4.3 percent to 1.95 million existing homes available for sale and is up 0.5 percent from a year ago. It’s the first year-over-year increase since June 2015, per the NAR.
NAR chief economist Lawrence Yun said the inventory uptick played a role in the increased housing activity.
“After two straight months of pending sales declines, home shoppers in a majority of markets had a little more success finding a home to buy last month,” Yun said. “The positive forces of faster economic growth and steady hiring are being met by the negative forces of higher home prices and mortgage rates.”
There could be more good news stemming from this report. Yun believes the worst of the current housing shortage could be over.
“Home price growth remains swift and listings are still going under contract at a robust pace in most of the country, which indicates that even with rising inventory in many markets, demand still significantly outpaces what’s available for sale,” added Yun. “However, if this trend of increasing supply continues in the months ahead, prospective buyers will hopefully begin to see more choices and softer price growth.”
While inventory is up, Yun said home supply isn’t fulfilling widespread demand just yet. Rising home prices continue to keep plenty of homebuyers on the sidelines.
“Even with slightly more homeowners putting their home on the market, inventory is still subpar and not meeting demand. As a result, affordability constraints are pricing out some would-be buyers and keeping overall sales activity below last year’s pace.”
Yun is currently forecasting a one percent decrease for existing home sales to 5.46 million in 2018. He also expects the national median existing-home price to rise by five percent.
Regionally, pending home sales increased by 1.1 percent in the South and by 0.7 percent in the West. However, the regions are 0.3 percent and 5.6 percent below last year, respectively.
If you’re thinking about diving into the current market, use these tips to make your home buying decision easier:
- Evaluate your area: Use websites like Zillow or Trulia to gauge the current inventory and median existing-home price in the neighborhoods on your home buying radar.
- Know how much home you can afford: Don’t search blindly for your dream home. After you’ve done your research, evaluate your situation and determine a range of prices based upon your location and needs.
- Talk to an expert: Our loan officers are experts in their markets and are eager to help you discover financing options tailor-made to your situation. Contact your Guaranteed Rate loan officer to learn more.
HOUSING INVENTORY SOURCE: https://www.nar.realtor/newsroom/pending-home-sales-reverse-course-rise-09-percent-in-june
Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Guaranteed Rate for current rates and for more information.