The housing market is experiencing a noticeable shift from a seller’s market to a buyer’s market, as indicated by a 5.4% drop in previously owned home sales in June compared to May. Lawrence Yun, chief economist for the National Association of Realtors, highlighted that homes are staying on the market longer, and sellers are receiving fewer offers. This shift is partly attributed to more buyers demanding home inspections and appraisals, along with a rise in inventory on a national scale.
Rising Inventory Levels
The inventory of homes for sale saw a significant increase of 23.4% from a year ago to 1.32 million units by the end of June. Despite this rise, the supply of homes stands at just a 4.1-month level, lower than the balanced threshold of a six-month supply. The duration that homes spend on the market also escalated to an average of 22 days, up from 18 days the previous year. These factors contribute to the current buyer’s market trend.
Although there has been a surge in new listings, particularly in the lower and smaller-priced range, median home prices continue to climb. The median price of existing homes sold in June reached $426,900, marking a 4.1% increase from the previous year and establishing a new all-time high for the second consecutive month. Notably, the higher end of the market is driving these price hikes, with sales of homes priced over $1 million being the only category to see gains. Conversely, the lower price range of $250,000 and below witnessed a significant decline in sales.
Buyer behavior is also evolving, with a growing number of sales being conducted in cash, accounting for 28% of transactions, up from 26% the previous year. Investors, however, have decreased their presence in the market, representing 16% of sales compared to 18% a year ago. With an influx of new inventory, the housing market is at a crossroads, where home prices could either stabilize or decrease if demand does not increase proportionately.
The housing market is undergoing a notable transformation characterized by shifting dynamics between buyers and sellers, rising inventory levels, contrasting price trends across market segments, and evolving buyer behavior. As the market continues to adapt to these changes, both industry professionals and prospective homeowners will need to closely monitor these developments to make informed decisions in the ever-evolving housing landscape.