The housing market is poised for a shift that could affect buyers well into 2020. According to realtor.com®‘s July 2019 Monthly Housing Trend report released this week, in just a few months, buyers may begin to see a drop in the number of homes for sale that could lead to the return of bidding wars, stronger price appreciation, and quicker home sales.
Continuing its unabated record growth, the U.S. median listing price in June reached its likely high point for the year at $316,000, earlier than its usual July peak due to the mismatch of what’s available and what buyers want.
Nationally, housing inventory grew 2.8 percent year-over-year, an addition of approximately 40,000 listings, down from May’s 2.9 percent growth. The slowing of inventory gains first appeared in 2019 with a decline from 6.4 percent growth in January to 5.8 percent in February. It continued throughout the spring with 4.4 percent growth in both March and April, 2.9 percent in May and now 2.8 percent in June. If this trend continues, inventory growth will flatten over the next three months and could hit its first decline in October 2019.
Part of this slowdown can be attributed to the fact that newly listed homes have either declined or reported meager growth in 2019, such as June’s 2.3 percent yearly decrease. The reason people aren’t putting their homes on the market could be a combination of rate-lock, recently decreased consumer confidence, and older generations choosing to age in place.
Only seven years ago, 30-year fixed mortgage rates reached their lowest point at 3.3 percent since Freddie Mac began tracking this data, which prompted many homeowners to refinance. Although rates are still low, they’re currently 50 basis points higher than they were in December 2012 and higher than one third of the weekly rates recorded over the last seven years, which means a substantial number of homeowners have mortgages with rates well below today’s levels. If homeowners want to trade up, they would not only have to pay more for a larger home, they would pay more to finance it. Additionally, consumer confidence fell 4.4 percent over the past year, which could reflect consumer concerns over a potential recession or future economic growth.
See the full June housing trend report here.