ResiClub co-founder and editor-in-chief Lance Lambert talks about the US housing affordability crisis on “Making Money.”
The number of Homes for Sale Transactions in the housing market are finally beginning to return to normal, helping to ease the country’s severe housing shortage.
According to a new report from Realtor.com, the total number of homes for sale, which includes those that are under contract but not yet sold, increased 6.2% in May compared to the same period last year.
In fact, the report found that the number of homes for sale on a typical day in May was 35.2% higher than a year ago, marking the seventh consecutive month of annual inventory growth.
There are other signs of improvement on the inventory front: Through the first five months of the year, housing inventory was at its highest level since 2020. But it remains extremely low compared to typical pre-pandemic levels, and supply is down 34.2% from 2017-2019 levels.
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Interest rates are declining slowly, but home prices remain elevated as buyers work through limited inventory. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
“We expect a significant gap to remain between 2024 housing inventory and the pre-pandemic housing market as this gap closes only gradually,” said the report, written by economist Daniel Hale and economic researcher Sabrina Speane.
of Lack of available housing Prices for homes for sale remain high even as mortgage rates hover near their highest levels in two decades. Sellers who locked in low mortgage rates before the pandemic began are reluctant to sell, leaving eager buyers with few options.
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While average listing prices are little changed from the same time last year, rising mortgage rates compared to May 2023 have caused monthly financing costs for a typical home to increase by about $158 per month, or 7.1%.
That means your income would need to increase by $6,400 to $119,700 to afford a median-priced home.
A display home in the Cold Spring Barbera Homes neighborhood on Wednesday, November 8, 2023, in Loudonville, New York. (Photo by Angus Mordaunt/Bloomberg via Getty Images/Getty Images)
“The housing market remains seller-biased, but is expected to shift in favor of buyers over the next 12 months as mortgage rates fall again and the number of homes for sale increases. We are already seeing this trend in the housing market,” Hale and Speanne wrote.
Economists predict mortgage rates will remain high for most of 2024, then Federal Reserve Still, interest rates are unlikely to return to the lows seen during the pandemic, and investors expect only one or two rate cuts this year.
Mortgage buyer Freddie Mac said Thursday Average interest rate for a 30-year loan It rose slightly to 7.04%, down from a peak of 7.79% in the fall but still significantly higher than the pandemic-era low of just 3%.
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A majority of homeowners say they would be nearly twice as willing to sell their home if their mortgage interest rate was 5 percent or higher, according to a Zillow survey. Currently, about 80 percent of mortgage holders have interest rates below 5 percent.
