Due to the shortage of single-family homes making it a seller’s market, the median price of second-hand housing in the United States exceeded US$350,000 for the first time on record in May.
This is what the industry calls the “seller’s market.”
The National Association of Realtors (NAR) said on Tuesday that the average price of second-hand housing in the United States in May exceeded US$350,000 for the first time in history, an increase of 23.6% year-on-year.
The sales prices of existing homes in every region of the country increased last month, marking the 111 consecutive months of year-on-year increase since 2012.
The housing price milestone last month was driven by the continued mismatch between supply and demand and was a symptom of increasing wealth and income inequality as the country’s economy continues to recover from last year’s COVID blow.
The market is full of home buyers, who continued to work during the pandemic and saw their wealth increase from the rise in the stock market, helping them to save a down payment. They also hope to use historically low interest rates — designed to support the national labor market — to lock in sweet mortgage deals.
This puts sellers in a dominant position as eager home buyers compete for what is available. But this imbalance of power also keeps some potential buyers on the sidelines, waiting for some of the heat in the country’s hot real estate market to fade.
Idle home buyers and inventory shortages help explain why the number of existing home sales in May fell by 0.9% compared to April, which is the fourth consecutive month of decline. But compared with the same period last year, sales increased by 44.6%.
NAR Chief Economist Lawrence Yun said in a press release: “Housing sales fell moderately in May and are now approaching pre-pandemic activity.” “Insufficient inventory remains an overwhelming factor hindering home sales. , But the decline in affordability is only squeezing some first-time homebuyers out of the market.”
In May, first-time home buyers accounted for 31% of existing home sales, while individual investors or second-time home buyers accounted for 17%.
A sign that large institutional investors hoping to snap up properties and rent them out for profit are still active in the market-all-cash sales last month accounted for 23% of transactions. This is a decrease from 25% in the previous month, but an increase of 17% from the same period a year ago.
The total housing inventory at the end of May was 1.23 million units, an increase of 7% from April’s inventory, but a decrease of 20.6% from the same period last year.