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The housing market is getting stranger by the day.
While affordability has arguably never been worse, prices are rising and there are virtually no homes for sale.
This is making it difficult for both the bulls and bears to make a case for a bounce or a crash.
When all is said and done, we may experience a stagnant market that fails to keep up with inflation.
and a severe economic downturn in the housing industry due to a decrease in sales volume.
New listings for sale fell seasonally in June
First things first, new real estate listings are down 25% from a year ago, according to a new report. redfin,
This covers the four-week time period ending June 4. Only 89,249 houses were listed.
And the real estate brokerage noted that new listings fell in all the metros analysed.
The decline was most pronounced in Las Vegas (-42.3% YoY), Phoenix (-40.9%), Seattle (-40.4%), Oakland (-39.8%), and San Diego (-37.2%).
These are areas that saw massive home price increases, then major home price corrections.
Home owners seem to be living in these areas longer, probably because they come to terms with their inability to move from a financial perspective.
Ultimately, the mortgage-rate lock effectively makes it both unfavorable and sometimes impossible for existing homeowners to move.
Simply put, selling your home with a 2-3% mortgage rate just doesn’t pencil you in for buying one with a 7% mortgage rate.
And the rents aren’t cheap either, so selling and renting for much less isn’t a viable option.
Active real estate listings are falling when they usually rise
Meanwhile, active listings (the number of homes available for sale at any time during the period) declined 4.6% from a year ago.
It was just the second decline in 12 months, the first a week ago when Activision fell 1.7%.
Redfin noted that active listings were also down month-over-month at a time of year when they typically increase.
Due to the lack of new listings, the total number of homes on the market fell to its lowest level since early June.
Long story short, there are no housing listings, which is good news to some degree because there aren’t too many buyers.
As mentioned, affordability isn’t great with mortgage rates at/near 7% and home prices still historically high.
This explains why the median home sale price was down just 1.6% from $379,463 a year ago.
This represents the smallest decline in the past three months as many of the year-to-date down markets start to turn things around.
Housing supply is up slightly from a year ago
While new listings and active inventory decreased, housing supply increased slightly compared to last year.
As of June 4, supplies stood at 2.6 months, which is the time it would take to clear inventory at current sales speeds.
But while it is up 0.5% from a year ago, it is still well below the 4-5 months that would represent a healthy, balanced housing market.
The reason it’s higher is because homes sit on the market longer and take longer to receive offers.
Again, you can blame affordability as there are fewer qualified buyers out there. And probably few people are interested even if they can afford it.
Nearly a third of homes that went under contract received an accepted offer within the first two weeks on the market, down from 38% a year earlier.
And homes that sold were on the market for an average of 28 days (the shortest duration since September), but much longer than the record low 18 days a year earlier.
So it is clear that the housing market is not booming at the moment, but the prices have remained stagnant due to the continuous paucity of inventory.
But this could change if mortgage rates remain high during the milder part of the calendar year (summer/fall/winter).
Nevertheless, the resilience of house prices continues to exceed expectations and defy housing bears.
Read more: When will the housing market crash again?
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