If the pandemic housing market was tough for buyers, the post-pandemic housing market might be even tougher. Despite the challenges, experts suggest that a housing market recession is unlikely. In fact, home prices are expected to continue their upward trajectory. So, if you're planning to enter the real estate market, it's time to prepare for hot post-pandemic prices.
Housing Inventory at Historic Lows
The housing market is facing a shortage of available properties. Single-family inventory hit a record low of 960,000 units in June, the lowest since tracking began in 1982. The total housing inventory at the end of June was 1.08 million units, with unsold inventory standing at a 3.1-month supply. Experts suggest that the market can easily absorb a doubling of inventory, highlighting the dire need for more homes to be listed for sale.
Elevated Mortgage Rates
Mortgage rates have been on the rise, further contributing to the limited housing supply. The 30-year fixed-rate mortgage averaged 6.96% as of July 13, a notable increase compared to the previous year. Homeowners who are currently locked into sub-5% mortgage interest rates are discouraged from selling their homes and buying new ones due to the higher interest rates. This factor adds to the scarcity of available homes in the market.
Slower Home Sales
The pace of home sales has slowed down considerably in June, dropping 19% compared to the previous year. Total existing home sales, including single-family homes, townhomes, condominiums, and co-ops, receded 3.3% from May to a seasonally adjusted annual rate of 4.16 million in June. However, experts believe that the pent-up demand will kick into gear if mortgage rates and inventory improve.
Other Housing Insights
First-time buyers accounted for 27% of home sales in June, a slight decrease from the previous months. All-cash sales represented 26% of transactions, with individual investors or second-home buyers making up a significant portion of these purchases. Distressed sales, such as foreclosures and short sales, remained stable at 2% of total sales.
In conclusion, while the post-pandemic housing market poses challenges for buyers, there is no sign of a housing market recession. With rising prices, low inventory, and elevated mortgage rates, it's clear that it's currently a tough market to be a buyer. However, if you're planning to enter the market, it's crucial to be prepared and make informed decisions. Stay updated on market trends, explore financing options, and work with a trusted real estate professional who can guide you through this competitive landscape.
This article has been authored by Swapna Venugopal Ramaswamy, a housing and economy correspondent for USA TODAY.