Asking prices on residential properties have reached record-shattering levels nationwide. This, combined with limited inventory, has put homebuying intentions on ice for many Americans. But in June, slightly more would-be buyers decided to put pen to paper, according to newly released sales numbers.
The National Association of Realtors' Pending Home Sales Index reached 110.2 in the month of June, up 1.5 percent from May and the first time in the previous three months that contract signings rose. It was also the first time since March that the PHSI increased on a year-over-year basis.
Lawrence Yun, the NAR's chief economist, indicated slim pickings are prompting aspiring owners to take advantage of listings soon after they're advertised.
"Market conditions in many areas continue to be fast paced, with few properties to choose from," Yun explained in a statement. "[This] is forcing buyers to act almost immediately on an available home that fits their criteria."
Inventory sparse, but positive signs emerge
A combination of factors has led to the inventory shortage, such as fewer sellers, a lack of lots available to begin construction, and a dearth of qualified builders. Indeed, in July, housing starts totaled a seasonally adjusted annual rate of 1.16 million units, according to the most recent numbers published by the U.S. Department of Housing and Commerce Department. That's nearly 5 percent below the pace of development this time 12 months ago. However, as the National Association of Home Builders points out, single-family starts are 8.6 percent ahead of how many projects were underway in 2016 in year-to-date estimates. Furthermore, in June, overall permit issuance jumped 19.2 in the Northeast.
Granger MacDonald, NAHB chairman, confirmed inventory conditions are slowly but surely getting better.
"The overall strengthening of the single-family sector is consistent with solid builder confidence in the market," MacDonald said. "The sector should continue to firm as the job market and economy grow and more consumers enter the housing market."
What may also lead to more options is fewer residential real estate investors, according to Yun. The NAR's chief economist referenced how since prices are rising rapidly, it's prompting a number of investors to wait it out until conditions cool, helping the marketplace catch its breath.
"Fewer investors paying in cash is good news, as it could mean a little less competition for the homes first-time buyers can afford," Yun exclaimed.
At the same time, though, the difference may not be significant, Yun conceded, because the severest of shortages happens to be among properties selling at discounted rates.
Construction strengthens in Northeast, Midwest
Meanwhile, the Northeast appears to hold some promise, as construction ramped up in July. Specifically, housing production for single- and multifamily units combined in this pocket of the U.S. climbed almost 16 percent, according to government figures. Development also swelled in the Midwest, up 15.2 percent.
The balance between supply and demand will ultimately determine the rate at which home prices will continue to change. Based on the NAR's predictions, though, the national median existing-home price for 2017 will likely finish 5 percent higher than in 2016.
For more information about this article, call 866-614-5959.