At the beginning of July, Realtor.com Chief Economist Jonathan Smoke was predicting this summer to be the “best summer for the housing market in a decade”. According to existing home sales, prices and median contract times, the market is fiercely competitive and moving quickly.
Existing home inventory is continuing to shrink.
Supply fell 0.9 percent in June, helping boost home prices but holding back sales. Existing home supply dropped to 2.12 million with supply relative to sales falling to 4.6 months. A balanced market is considered a 6-month supply.
Home sales reached the highest rate since the recession in June.
Despite extremely low inventory, existing home sales increased 1.1 percent from May to June, which totaled a 5.570 million annualized rate. This is the highest sales pace since February 2007.
Lack of supply has been a plus for sellers.
The median existing home sales price rose 3.7 percent in June to $247,700, according to the National Association of Realtors.
Listed homes went under contract in the shortest time frame since 2009.
The typical home went under contract in 41 days in June, according to a press release from Business Wire. In the last year, the amount of time the median home stayed on the market is down 4 days, according to Redfin’s data.
Competitive markets are spurring aggressive price offers.
According to Redfin, the average sale-to-list price percentage was up to 95.5, the highest ratio recorded since Redfin began tracking metrics in 2009. This ratio is up from 94.9 last year.
Nearly a quarter of homes sold in June also sold above listing price (23.6 percent), which is up from 22.2 percent in June 2015.
New home sales are strong but optimism for future sales has dropped.
The Housing Market Index, which is compiled based on survey responses of present sales of new homes, expectations of future sales and homebuyer traffic, dropped one point in July. Though the index is well above the break-even point, at 59, builders are pointing to weakness in homebuyer traffic.
May new home sales fell a drastic 6.0 percent, but the annualized sales rate, 551,000, reached the second best level since the recession. Stay tuned for our weekly economic review for the new home sales report for June.