NAR’s chief economist calls 2023 so far “a real downer,” with sales 23% lower. As pent-up demand grows, the “market can easily absorb a doubling of inventory.”
WASHINGTON – Existing-home sales slipped in June, according to the National Association of Realtors® (NAR), though it varied by region month-to-month: The Northeast saw gains, the Midwest held steady, and the South and West posted declines
Year-over-year, however, all four regions recorded declines.
Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – receded 3.3% from May to a seasonally adjusted annual rate of 4.16 million in June. Year-over-year, sales fell 18.9% (down from 5.13 million in June 2022).
“The first half of the year was a downer for sure, with sales lower by 23%,” says NAR Chief Economist Lawrence Yun. “Fewer Americans were on the move despite the usual life-changing circumstances. The pent-up demand will surely be realized soon, especially if mortgage rates and inventory move favorably.”
Total housing inventory registered at the end of June was 1.08 million units, identical to May but down 13.6% from one year ago (1.25 million). Unsold inventory sits at a 3.1-month supply at the current sales pace, up from 3.0 months in May and 2.9 months in June 2022.
“There are simply not enough homes for sale,” Yun says. “The market can easily absorb a doubling of inventory.”
The median existing-home price for all housing types in June was $410,200, the second-highest price of all time and down 0.9% from the record-high of $413,800 in June 2022.
The monthly median price surpassed $400,000 for only the third time, joining June 2022 and May 2022 ($408,600). Prices rose in the Northeast and Midwest but waned in the South and West.
“Home sales fell but home prices have held firm in most parts of the country,” Yun says. “The national median home price in June was slightly less than the record high of nearly $414,000 in June of last year. Limited supply is still leading to multiple-offer situations, with one-third of homes getting sold above the list price in the latest month.”
June housing report insights
Properties typically remained on the market for 18 days in June, identical to May but up from 14 days in June 2022. For the month, three out of four (76%) homes were on the market for less than a month.
First-time buyers made up 27% of sales in June, down from 28% in May and 30% in June 2022.
All-cash sales accounted for 26% of June’s transactions in June, up from 25% in both May 2023 and June 2022.
Individual investors or second-home buyers, who make up many cash sales, purchased 18% of homes in June, up from 15% in May and 16% the previous year.
Distressed sales – foreclosures and short sales – represented 2% of sales in June, virtually unchanged from last month and the prior year.
According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.96% as of July 13. That’s up from 6.81% the previous week and 5.51% one year ago.
Single-family and condo/co-op sales: Single-family home sales decreased to a seasonally adjusted annual rate of 3.72 million in June, down 3.4% from 3.85 million in May and 18.8% from the previous year. The median existing single-family home price was $416,000 in June, down 1.2% from June 2022.Existing condominium and co-op sales recorded a seasonally adjusted annual rate of 440,000 units in June, down 2.2% from May and 20.0% from one year ago. The median existing condo price was $361,600 in June, up 1.9% from the previous year ($354,800).
Regional breakdown: Existing-home sales in the Northeast grew 2.0% month-to-month to an annual rate of 510,000 in June, down 21.5% from June 2022. The median price in the Northeast was $475,300, up 4.9% from the prior year.In the Midwest, existing-home sales were unchanged from one month ago at an annual rate of 990,000 in June, slumping 19.5% from one year ago. The median price in the Midwest was $311,800, up 2.1% from June 2022.Existing-home sales in the South faded 5.4% from May to an annual rate of 1.91 million in June, a decrease of 16.2% from the previous year. The median price in the South was $366,600, down 1.2% from June 2022.In the West, existing-home sales declined 5.1% from the previous month to an annual rate of 750,000 in June, down 22.7% from one year ago. The median price in the West was $606,500, down 3.4% from June 2022.
A pair of reports out Tuesday reveals that U.S. home prices ticked up slightly in April compared to March, though the reports also offered mixed signals about how well the market is holding up over the longer term.
Selma Hepp
Of Tuesday’s new numbers, the S&P CoreLogic Case-Shiller Index shows the biggest month-over-month gains in April, rising 1.3 percent. In a blog post on the numbers, CoreLogic Chief Economist Selma Hepp described this uptick as a “strong gain” for home prices and notes that it suggests “homebuying activity is heating up in many markets.”
“In addition, price gains among high-tier homes are once again showing a strong rebound,” Hepp added in a statement.
April’s gains represent the third consecutive month of home price increases, according to a report on the index.
Credit: CoreLogic
Also on Tuesday, the U.S. Federal Housing Finance Agency released its monthly FHFA House Price Index report. That report shows that home prices rose 0.7 percent in April compared to March.
Both the FHFA House Price Index and the S&P CoreLogic Case-Shiller Index are respected measures of U.S. home prices. Broadly speaking, they tend to highlight the same trends, though differences in methodology mean they don’t produce exactly the same numbers.
For example, the two indexes weigh differently valued homes in different ways, and the FHFA House Price Index includes reappraisals while the S&P CoreLogic Case-Shiller Index does not.
Interestingly, the two figures were in disagreement about what happened to home prices in April 2023 compared to April 2022. Year over year, the S&P CoreLogic Case-Shiller Index experienced a 0.2 percent decline in April — a drop that Hepp described as “the first annual loss since April of 2012.”
However, the report on the FHFA House Price Index states that in April prices actually rose 3.1 percent year over year. Despite that uptick, Nataliya Polkovnichenko — supervisory economist in FHFA’s Division of Research and Statistics — said that “house prices in some regions of the country continued to decline” in April.
The S&P CoreLogic Case-Shiller Index report also highlights some regional variation, with Miami seeing the biggest year-over-year price gains at 5.2 percent. Boston and Cleveland experienced the biggest month-over-month gains, at 2.9 percent and 2.3 percent, respectively.
Credit: CoreLogic
The report also reveals that month-over-month gains in many metro areas actually outpaced what was happening before the COVID-19 pandemic.
Economists generally responded to Tuesday’s new numbers with optimism. In a statement, Bright MLS Chief Economist Lisa Sturtevant suggested “a summer rebound” could be in the works thanks to “this surprisingly resilient housing market.” And she suggested, “this could be the turning point for home prices.”
Lisa Sturtevant
Sturtevant also points to high demand as a key factor in the current market.
“Rising mortgage rates were supposed to quell homebuyer demand and push home prices down,” Sturtevant said. “As rates escalated last year, buyer activity did stall. However, higher mortgage rates have not dampened buyer interest as much as many thought (or hoped) they would. As a result, while the Case-Shiller index showed a decline in April, the big home price drops some had predicted have not materialized.”
In a similar vein, George Ratiu — chief economist for real estate insights and analytics company Keeping Current Matters — said in a statement that the S&P CoreLogic Case-Shiller Index numbers “highlighted a spring housing market regaining its footing after a winter of dire forecasts.”
George Ratiu
Ratiu went on to note that demand rebounded in the spring, but that it also “ran headlong” into limited supply. That dynamic pushed prices higher and, to the surprise of some buyers, resulted in “multiple bids on well-priced properties,” Ratiu said. He added that this outcome is “an unexpected turn of events from the doom-and-gloom forecasts issued at the start of the year.”
“Real estate fundamentals remain out of balance, with demand still outpacing supply, and have a way to go toward health,” Ratiu said. But he also ultimately concluded that the “return of seasonal patterns is reinforcing the view that we are moving in a promising direction.”
NAR report cites Port St. Lucie for its homeownership rate of 83% for mid-income residents, and Ocala and Palm Bay for a Black ownership rate higher than 60%.
KANSAS CITY, Mo. – A new housing report by the National Association of Realtors® finds that middle-income homeowners accumulated $122,100 in wealth as their homes appreciated by 68% in the last 10 years.
The report, Wealth Gains by Income and Racial/Ethnic Group, speaks to the value agents and Realtors® bring to consumers when helping buy and sell homes that build generational wealth. NAR released the report during its 2023 Realtor Broker Summit.
Variations by income and race
The data found substantial variations in homeownership rates across different income and racial and ethnic groups. For instance, low-income homeowners were able to build $98,900 in wealth in the last decade from home price appreciation only, while upper-income households saw an increase of $150,800.
“This analysis shows how homeownership is a catalyst for building wealth for people from all walks of life,” says Lawrence Yun, NAR’s chief economist. “A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.”
Although Black homeowners experienced the smallest wealth gains among any other racial or ethnic group, Black homeowners accumulated over $115,000 in wealth in the last decade.
For the first time, NAR also identified the top 10 U.S. metros in which Black homeowners saw the largest wealth gains and homeownership rates over the last 10 years. They include:
Bellingham, Washington
Ocala, Florida
Palm Bay, Florida
Modesto, California
Greeley, Colorado
Charleston, South Carolina
In each metro, more than 60% of Black households own their home, and those owners accumulated more than $125,000 in wealth over the last decade.
Along with the wealth gains accumulated in the last decade, homeowners also saw their debt drop by 21%. Many homeowners were able to refinance and secure a rate lower than 4% in the months following the onset of COVID-19, Yun noted.
Homeowners generally gained more equity in areas with high-cost homes. No matter the income level, owners in expensive areas saw the largest wealth gains. In the San Jose metro, for example, low-income owners accumulated nearly $630,000 in the last decade, and middle-income owners gained $643,000. All of the top 10 areas with the largest wealth gains for low-income owners – surpassing $290,000 – were located in California.
In the top 10 areas with the highest homeownership rates for middle-income households, owners gained $110,000 in wealth on average in the last 10 years. In Ogden, Utah, for example, 85% of middle-income households own their home, and they’ve built nearly $220,000 in wealth in the last decade.
Some significant areas to note include Port St. Lucie, Florida, where the homeownership rate for middle-income households was 83%, and middle-income owners gained nearly $200,000 in wealth. The cities of Barnstable Town, Massachusetts and Palm Bay, Florida, were other areas where most middle-income households both owned their home and accumulated a substantial amount of wealth – over $170,000 – in the last decade.
In the areas with the highest homeownership rates for low-income households, wealth gains were $140,000 on average. NAR includes a number of Florida cities in its list of high equity gains for lower-income households. In Prescott, Arizona, more than 2 out of 3 low-income households (68%) own their own home, and owners have built more than $200,000 in wealth in the last decade.
Barnstable Town, Massachusetts, as well as the Florida cities of North Port, Port St. Lucie, Palm Bay and Deltona were other areas where most low-income households owned their home and accumulated a substantial amount of wealth – over $120,000 – in the last decade.
Spring is around the corner, and the signs are pointing to a pick-up in sales on the horizon. Read more from NAR’s latest housing report.
Existing-home sales continued to ease in January, marking a yearlong stretch of declines coming off pandemic-fueled highs. But median home prices still are rising.
Total existing-home sales—completed transactions that include single-family homes, townhomes, condos and co-ops—decreased 0.7% in January compared to December 2022, the National Association of REALTORS® reported Tuesday. Home sales are down nearly 37% compared to a year earlier (at a seasonally adjusted annual rate of 4 million in January).
But as mortgage rates begin to stabilize, economists are hopeful for a turnaround in sales activity for the housing market heading into spring.
“Home sales are bottoming out,” says Lawrence Yun, NAR’s chief economist. “Prices vary depending on a market’s affordability, with lower-priced regions witnessing modest growth and more expensive regions experiencing declines.”
Overall, the median existing-home sales price nationwide rose 1.3% compared to a year ago, reaching $359,000, NAR reports. Home prices climbed in three out of the four major regions of the U.S., only falling in the West last month.
The supply of homes for sale continues to be tight in most markets across the country, helping to keep home prices higher. Still, total housing inventory rose 2.1% in January month-over-month and is up by 15.3% compared to a year ago. Unsold inventory, remains, at a brisk, 2.9-month supply at the current sales pace.
“Inventory remains low, but buyers are beginning to have better negotiating power,” Yun says. “Homes sitting on the market for more than 60 days can be purchased for around 10% less than the original list price.”
Here’s a closer look at other key indicators from NAR’s latest housing report: Days on the market: Fifty-four percent of homes sold in January were on the market for less than a month in January. On average, properties remained on the market for 33 days in January, up from 26 days in December and 19 days a year earlier. First-time home buyers: As competition lessens, first-time home buyers are re-emerging. First-time buyers accounted for 31% of sales in January, up from 27% a year earlier. All-cash sales: All-cash transactions comprised 29% of sales in January, up from 27% in January 2022. Individual investors and second-home buyers tend to make up the biggest bulk of all-cash sales. They purchased 16% of homes in January, down from 22% a year earlier. Distressed sales: Foreclosures and short sales continue to make up a very small share of sales. Distressed sales accounted for 1% of sales in January, matching levels from a year earlier.
Regional Snapshot Here’s how existing-home sales fared across the country in January:
Northeast: Existing-home sales fell 3.8% from December, reaching an annual rate of 500,000 in January. Sales were down nearly 36% from a year earlier. Median price: $383,000, up 0.3% from January 2022
Midwest: Sales decreased 5% compared to the previous month, reaching an annual rate of 960,000 in January. Sales were down 33.3% from one year ago. Median price: $252,300, up 2.7% from January 2022
South: Sales rose 1.1% in January compared to December, reaching an annual rate of 1.82 million. Sales are down nearly 37% from the prior year. Median price: $332,500, an increase of 3.4% from one year ago
West: Existing-home sales increased 2.9% in January, reaching an annual rate of 720,000, but still down 42.4% from the previous year. Median price: $525,200, down 4.6% from January 2022
This week, Chief Economist Danielle Hale discusses what small business optimism, consumer and producer inflation data, and retail sales data signal about the U.S. economy. She also highlights what these data imply for the Fed’s likely path forward.
0:10 – Business optimism trends 0:25 – Inflation trends 1:24 – Mortgage rates 1:40 – Construction trends 2:11 – Real estate listings trends
Buyers who wait for more inventory, lower interest rates or something else may never own a home. And given history, 2023 is a pretty good year to commit.
McDONOUGH, Ga. – Mortgage rates are finally falling across the fruited plains, with rates in the 5.6% range for a 30-year fixed mortgage not uncommon in early February. Couple that with declining home prices and an uptick in the residential real estate inventory, and it looks like the great American homebuyer finally has leverage after two years of home sellers calling the shots.
“2023 will be better for buyers,” said Magellan Realty LLC mortgage broker Alex Caras. “As the Federal Reserve keeps interest rates at the current levels, the buying market will start to open up more, reducing competition for existing homes.”
Construction woes brought on by the supply chain issues are also being eased, “so more new homes will be on the market,” Caras added.
Buyers getting an edge
Those are the macro reasons why U.S. homebuyers have a leg up going into the busy spring and summer real estate season. Buyers should have an edge thanks to these five realities, as well.
1. Mega-high prices are a thing of the past. “The price climbing we saw in 2020 and 2021 has hit a plateau,” said Guaranteed Rate Mortgage Senior Vice President of Lending Jennifer Beeston. “It took a good chunk of 2022 for many sellers to realize 2021 is long gone and they needed to be more realistic with the pricing and condition of their home.”
In addition, buyers see a return to a more balanced market in 2023. “Now, buyers actually can get inspections and can negotiate prices,” Beeston said. “That wasn’t the case with the drama of 2022.”
2. The Federal Reserve is hitting the brakes. The U.S. Federal Reserve is slowing down its policy of substantial interest rate increases that were prevalent in 2022.
“This means more buyers will be able to purchase a home at a lower rate,” Caras told TheStreet. “Home prices have been reduced to a more reasonable level as well, and this will continue for much of 2023 as the competition to purchase homes has lessened.”
3. The pandemic is over. Buyers will have an opportunity to negotiate again in 2023 and even more so in 2024.
“We’re likely going to see some distressed sales and sellers will need to become more realistic,” said Pulse International Realty founder Rena Kliot. “The spike in home prices is not sustainable and was in direct correlation to the pandemic. During the dark days of the pandemic, there were many desperate and emotional purchases.”
4. Changing residential market tastes. While single-family homes will continue to be popular, the U.S. condo market will return in full swing.
“Life as we knew it seems to be returning and that is drawing people back to urban dwelling – especially with condo living,” Kliot said. “Condo prices are now also more affordable or negotiable than single-family residences.”
5. Strong signals from the stock market. Across the U.S., there seems to be a general sigh of relief the worst has passed.
“Inflation has peaked, interest rates have peaked, and home prices have peaked for now,” said Elegran Real Estate managing director Jared Antin. “The stock market – notably the tech-heavy NASDAQ – has seen a significant rebound thus far in 2023, which instills a certain level of confidence in the consumer.”
The falling market through much of 2022 had the opposite effect, reducing consumer appetite for a new home with rising interest rates and inflation.
“Now, a more positive consumer base will help fuel a rebounding real estate market,” Antin noted.
One of the most important things a would-be home buyer should do right now is to stay hopeful and be prepared.
“Don’t assume that just because you’re having trouble finding a home now, or can’t afford a house at today’s rates, that you’ll never be a homeowner,” LendingTree senior economist Jacob Channel. “If you have patience and are willing to compromise on some things, like how many bathrooms your house needs to have or what specific neighborhood you require, you can make your dream of homeownership a reality.”
Additionally, being prepared financially when a good deal arises is critical right now.
“Be diligent about saving money and make all of your monthly payments on time to protect your credit,” Chanel told TheStreet. “Also, shop around and compare mortgage offers from different lenders or look into different mortgage loan programs – like FHA or USDA backed loans – so you can make the home buying experience more affordable.”
It’s down from last week’s 6.33%. Freddie Mac’s chief economist says it provides a “much-needed boost” for the housing market, but inventory is a concern.
Copyright 2023 The Associated Press. All rights reserved.
WASHINGTON (AP) – The average long-term U.S. mortgage rate fell this week to its lowest level since September, a potential boost to the housing market which has been in decline for nearly a year.
Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate fell to 6.15% from 6.33% last week. A year ago the average rate was 3.56%.
The average long-term rate reached a two-decade high of 7.08% in the fall as the Federal Reserve continued to boost its key lending rate in its quest to cool the economy and tame inflation.
The big rise in mortgage rates during the past year has throttled the housing market, with sales of existing homes falling for 10 straight months to the lowest level in more than a decade.
Though home prices have retreated as demand has declined, they are still nearly 11% higher than a year ago. Higher prices and a doubling of mortgage rates have made homebuying much less affordable for many people, but recent rate declines could give some homebuyers new hope.
“Rates are at their lowest level since September of last year, boosting both homebuyer demand and homebuilder sentiment,” said Sam Khater, Freddie Mac’s chief economist. “Declining rates are providing a much-needed boost to the housing market, but the supply of homes remains a persistent concern.”
At its final meeting of 2022, the Federal Reserve raised its rate 0.50 percentage points, its seventh increase last year. That pushed the central bank’s key rate to a range of 4.25% to 4.5%, its highest level in 15 years.
Though inflation at the consumer level has declined for six straight months, Fed officials have signaled that they may raise the central bank’s main borrowing rate another three-quarters of a point in 2023, which would be in a range of 5% to 5.25%.
Rates for 30-year mortgages usually track the moves in the 10-year Treasury yield, which lenders use as a guide to pricing loans. Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Federal Reserve does with interest rates can also influence the cost of borrowing for a home.
The rate for a 15-year mortgage, popular with those refinancing their homes, also declined this week, to 5.28% from 5.52% last week. It was 2.79% one year ago.
Home prices rose 8.6% in 3Q, with 46% of metros seeing double-digit price growth – a drop from 80% in 2Q. Of the top 10 high-price-increase metros, 7 are in Fla.
WASHINGTON – An overwhelming majority of metro markets saw home price gains in the third quarter of 2022, according to the National Association of Realtors® (NAR). That increase was in spite of rising mortgage rates that approached 7% and declining sales.
Of the 185 metros NAR tracks, 46% had double-digit price increases, though that’s down from 80% in the second quarter.
The national median single-family existing-home price climbed 8.6% year-to-year to $398,500. While still a notable price increase, it’s down from the 14.2% recorded in the previous quarter.
“Much lower buying capacity has slowed home price growth and the trend will continue until mortgage rates stop rising,” says NAR Chief Economist Lawrence Yun. “The median income needed to buy a typical home has risen to $88,300 – that’s almost $40,000 more than it was prior to the start of the pandemic back in 2019.”
Among the major U.S. regions, the South registered the largest share of single-family existing-home sales (44%) and the greatest year-over-year price appreciation (11.9%) in the third quarter. Prices were up 8.2% in the Northeast, 7.4% in the West, and 6.6% in the Midwest.
Fla. has 7 of top 10 metros for price growth
North Port-Sarasota-Bradenton – 23.8%
Lakeland-Winter Haven – 21.2%
Myrtle Beach-Conway-North Myrtle Beach, S.C.-N.C. – 21.1%
Panama City – 20.5%
Deltona-Daytona Beach-Ormond Beach – 19.6%
Port St. Lucie – 19.4%
Greenville-Anderson-Mauldin, S.C. – 18.9%
Kingsport-Bristol-Bristol, Tenn.-Va. – 18.8%
Tampa-St. Petersburg-Clearwater – 18.8%
Ocala (18.8%
10 most expensive markets in the U.S.
San Jose-Sunnyvale-Santa Clara, Calif. – $1,688,000; 2.3%
San Francisco-Oakland-Hayward, Calif. – $1,300,000; -3.7%
“The more expensive markets on the West Coast will likely experience some price declines following this rapid price appreciation, which is the result of many years of limited home building,” Yun says. “The Midwest, with relatively affordable home prices, will likely continue to see price gains as incomes and rents both rise.”
Higher cost for monthly payments
In the third quarter of 2022, stubbornly high home prices and increasing mortgage rates reduced housing affordability. The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $1,840. That’s a marginal increase from the second quarter ($1,837) but a significant year-to-year jump of $614 – or 50%.
Families typically spent 25% of their income on mortgage payments, down from 25.3% in the prior quarter, but up from 17.2% one year ago.
“A return to a normal spread between the government borrowing rate and the home purchase borrowing rate will bring the 30-year mortgage rates down to around 6%,” Yun says. “The usual spread between the 10-year Treasury yield and the 30-year mortgage rate is between 150 to 200 basis points, rather than the current spread of 300 basis points.”
First-time buyer challenges
First-time buyers looking to purchase a typical home during the third quarter of 2022 continued to feel the impact of housing’s growing unaffordability. For a typical starter home valued at $338,700 with a 10% down payment loan, the monthly mortgage payment rose to $1,808 – nearly identical to the previous quarter ($1,807) but an increase of almost $600 (49%), from one year ago ($1,210).
First-time buyers typically spent 37.8% of their family income on mortgage payments, up from 36.8% in the previous quarter. A mortgage is considered unaffordable if the monthly payment (principal and interest) amounts to more than 25% of the family’s income.
A family needed a qualifying income of at least $100,000 to afford a 10% down payment mortgage in 59 markets, up from 53 in the prior quarter. Yet, a family needed a qualifying income of less than $50,000 to afford a home in 17 markets, down from 23 in the previous quarter.
For those looking for the good news about today’s real estate market. A bit of a deep dive, about 60 minutes worth but excellently delivered. Three main facts tell us it’s not all doom and gloom. Combine them with the time of year and the general fear that has most buyers/sellers on the sidelines, spells opportunity. (40:00). We can help should you decide to take advantage of today’s market.
Historical trends, what happens after quantitative tightening (12:00)
Demographics, there’s a lot of millennials (24:50)
Inventory levels, yes they are still historically low (22:00)
