Sales are increasing, after dropping for months, amid crazy prices.
By Wolf Richter for WOLF STREET.
Inventories of existing single-family homes, condominiums and co-ops increased for the fourth consecutive month. With sellers coming out of the woods and new listings have been increasing for months, now is the perfect time to sell a home. Sales edged up from the previous month, after months of steep declines that canceled out the entire pandemic peak. And the prices have skyrocketed. That’s the housing market in June, according to data from the National Association of Realtors today.
Sales of existing homes of all types rose 1.4% in June from May, after previous sharp declines, to a seasonally adjusted annual rate of 5.86 million homes, below july 2020, the month the pandemic peak in home sales began, after largely unwinding the peak that began last summer (historical data via YCharts):
The sellers are now gradually coming out of the woods. There has perhaps never been a more ideal time to sell a home: Prices have soared amid click-bait media stories of crazy auction wars where FOMO-motivated buyers are bidding n no matter what, blind inspections get canceled and sellers can get away with anything. For buyers, now is the perfect time to close a really bad deal. But whatever. For sellers, this is ideal. And sellers are starting to see it that way.
New registrations increased by 11% in June, from May, when they are normally, in the pre-pandemic years, decreases from May, with May being the seasonal peak of the year for new registrations. But not this year: 446,600 new homes went on sale in June, up 11% from May, and the most since September 2019, according to the realtor.com home listings database (June is linked with a green line):
The total inventory of unsold homes on the market increased 3.3% in June from May to 1.25 million homes, the fourth consecutive month of increases. Inventories are still very low, but are at their highest since last November.
The supply of unsold homes on the market reached 2.6 months, the fifth consecutive month of increase and the highest supply since last September (data via YCharts):
For people who bought a home, the meme during the pandemic has been not to put the previous now vacant home on the market, but rather to put up price spikes before selling it. This calculation has worked so far.
But surveys of homeowners, including a survey of homeowners conducted by the NAR, show that a much larger proportion than the typical proportion of homeowners plan to sell their homes in the next 12 months, more than half of d ‘between them planning to list their home this fall. And now we see the first glimpses of the meme rollover.
In Fannie Mae’s latest monthly national housing survey, the percentage of people who said it was a ‘bad time to buy a home’ soared for the third consecutive month to a skyrocketing 64%, respondents citing house prices as the predominant reason. This survey was created during the real estate crisis, and the data only dates back to 2010.
And a record 77% of those surveyed said it was the ‘right time to sell a house’:
Investors and cash buyers were important, but mortgage applications fell to 2019 levels. In June, 23% of sales were entirely in cash, as in May, and up from 16% in June 2020. This includes institutional investors who can borrow institutionally, rather than through mortgages for each home, and this includes individual investors and second home buyers who have the cash or can borrow against their portfolio and get a mortgage later.
With cash buyers in droves, mortgage applications to buy a home more than dissipated the pandemic peak. The Mortgage Bankers Association Weekly Purchase Mortgage Index in recent weeks has been mostly lower than the same period in 2019 (data via Investing.com):
Crazy prices continued. The median price of existing homes climbed 23.4% in June, compared to June of last year. The previously typical seasonal fluctuations have been completely abolished since March 2020, an indication of the evolution of the housing market.
The seasonal price spikes until 2019 occurred in June and prices started to decline seasonally in July. A price drop in July this year would indicate a return to seasonality, which would be a first step back from the madness (data via YCharts):
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