After a strong month of sales in May, existing home sales dipped back down this past month.
It was caused by the shortage of available homes on the market, the same problem that has been plaguing the housing market for the past few years.
In June, existing home sales decreased by 1.8 percent, bringing the current pace to a seasonally adjusted annual rate of 5.52 million homes. This is the second lowest mark of 2017 after February’s low numbers.
The silver lining is that the current seasonally adjusted annual rate is higher than it was a year ago, and that could be a sign of a slow improvement.
For home buyers, the issue has been that there aren’t enough homes available to be purchased. Normally, existing homes make up the bulk of home sales. However, homeowners have not been eager to move.
This is despite the fact that many areas have homes selling for a record high average.
The housing shortage is nothing new, and many home buyers have still had success finding a home despite the odds seemingly against them. Homes are still being sold, and people are still buying them.
Low mortgage rates have been fueling the high demand for homes, and if home sales continue to gradually pick up, home buyers could end up finding a reasonably priced home with a low mortgage rate attached.
About Existing Home Sales
Each month, the National Association of Realtors (NAR) tracks the number of homes sold. The existing home sales report is part of this, and it tracks all homes that are not newly built. This includes houses, townhouses, co-ops and condos.
June’s numbers aren’t entirely encouraging, but they do show signs of improvement. Compared to one year ago, June’s sales pace was 0.7% higher.
But homeowners aren’t putting their homes on the market fast enough to keep up with demand. The total housing inventory at the end of June was 1.96 million, down 0.5% from May.
Some home buyers are expecting new home sales to make up for the dip in existing home sales, but contractors are having trouble building new homes. There is currently a labor shortage for home construction.
As a result of the shortage, many contractors have cut back on the number of homes they’re building.
What’s more, the median prices of homes is also increasing. In June, the median price for all housing types was $263,000, continuing the trend of each month setting a new record.
But home buyers are still finding housing, and many areas still have very affordable housing.
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First Time Home Buyers Still Buying
First time home buyers made up 33 percent of all existing home sales in June. At the current pace, they will make up roughly 35 percent of all existing home sales in 2017.
It’s encouraging to see that first time home buyers are still making an impact on the housing market. It shows that they are optimistic about the future of housing.
According to Fannie Mae, the future outlook for the housing market is still positive, despite a shortage of available homes.
Those looking to purchase a home shouldn’t be deterred by the national housing shortage. Just because there are not as many homes available as there have been doesn’t mean it’s impossible to find a home.
At some point, the market will become less of a seller’s market. Home buyers could end up finding more available options going into the fall as the busy summer buying season comes to an end.
Current Mortgage Rates
Mortgage rates were rising through the beginning of 2017, but they have recently dropped to much lower levels.
Also, current rates are much lower than they have been historically. Rates are expected to rise throughout the year, so keeping track of rates could help when looking to buy a home.