Fewer Homes for Sale…But They May be More Affordable
According to realtor.com®’s August 2019 housing trend report, the contradictory news reflects consumers’ conflicting feelings. “The state of the housing market as we head into the latter half of 2019 is a tug of war between increased affordability and economic anxiety. We’re starting to see this tension play out in our August data,” said George Ratiu, senior economist for realtor.com®.
Continued low interest rates brought more homebuyers into the market. However, at the same time, talks of trade wars and cutbacks in corporate spending triggered generalized uneasiness about the stability of the economy, causing some to hold back and stay put in their current homes. The combination resulted in a dip in housing inventory, which had finally been ticking upward again this year.
While the inventory lag happened sooner than expected, it had indeed been on analysts’ radars. Earlier this spring, realtor.com® predicted U.S. inventory would decline in the fall of 2019. However, as mortgage rates dipped lower than expected and wages rose, buyers swallowed up existing inventory more quickly than anticipated.
Conversely, home prices are slowing, despite the drop in inventory. The U.S. median listing price in August was $309,000. While this is 4.9 percent higher than a year ago, it is 1.8 percent lower than July and represents the largest drop from July to August since 2012. Typically, home prices increase from June until September. Although July to August declines do occur, the size of this drop points to an earlier than usual deceleration of prices, likely attributed to recent concerns over economic uncertainty.
The outlook for the future? Murkier than ever. As Ratiu says, “Strong but opposing forces make it more difficult to predict what will happen in the second half of this year. If the headwinds of economic uncertainty intensify, it could prompt a decrease in buyer demand and shift housing inventory’s current trajectory. But if increased purchasing power prevails, we could see even more inventory declines and intensified competition between buyers.”
Published with permission from RISMedia.