Home buyers are picking up any available properties, seemingly unfazed by rising mortgage rates and a lack of available homes. The National Association of Realtors said Wednesday that pending home sales, a measure of potential home sales based on contract signings, barely increased by 0.9% in July, marking the second consecutive month of growth.
According to Lawrence Yun, chief economist for the National Association of Realtors, “the small gain in contract signings shows the potential for further increases in light of the fact that many people have lost out on multiple” opportunities to buy because of escalating bidding wars. “Jobs are being created, broadening the pool of potential homeowners. However, high mortgage rates and a lack of available properties have momentarily prevented many people from buying.
Some purchasers are being discouraged by high housing prices and mortgage rates, which just crossed the 7% mark. According to NAR data, pending home sales are down 14% from a year ago. Nevertheless, the lack of existing housing inventory, which was down 15% in July from a year earlier, is being held partially responsible for that yearly decline.
Buyers who aren’t priced out of the market are increasingly turning to new house development for more options as a result of the shortage of accessible existing homes. According to a recent Commerce Department data, sales of newly constructed single-family houses increased by about 32% in July compared to the same month last year.
According to Alicia Huey, head of the board of the National Association of Home Builders, “new-home sales were strong in July due to an ongoing housing deficit in the U.S. and a lack of resales stemming from many homeowners electing to stay put to preserve their low mortgage rates.”
In July, the typical sales price of a newly constructed home dropped 9% annually to $436,700, coming very close to the median price of an existing home ($406,700).
Regional Prospects
The South and West have seen the greatest increases in the signing of contracts. According to NAR, pending home sales increased in the two regions in July while falling in the Northeast and Midwest.
According to Yun, “the West region experienced a meaningful price decline in the past year, and as a result, buyers are quickly returning.” According to a recent NAR study, existing-home sales in the West increased 2.7% in July over June while the median home price remained stable at $610,500.
All four of the country’s major regions reported a fall in pending home sales in July compared to a year ago, despite the housing market’s limited inventory and higher mortgage rates than a year ago.
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