House prices are high all time, but more stock is cooling down price growth
The growth of the home price is cooling
In Early 2021I emphasized the need for higher mortgage interest to help cool the prices of the housing market. I also noted that we should not worry about a considerable crash of the home prize or a serious recession, such as the one in 2008. The mortgage interest only started to rise in mid -2022, which resulted in considerable damage to affordability. However, after three years of the lowest home sales, the inventory has grown back to a reasonable level. Consequently, the growth of the home prize year after year is delayed.
If you look at the inventory data below, you can see that we are no longer at dangerously unhealthy levels. So although house prices are a record high today, we are on a much healthier market than we have been in recent years.
Keep in mind that the median selling prices are very seasonal and that we are now entering the traditional period of deterioration for the calendar year. We usually see the highest median selling price in the summer, which then gradually fades in the fall and winter.
Housing in June
The total home inventory in June was 1.53 million units
—Down 0.6% from May
—Up 15.9% from June 2024 (1.32 million).
Non -selling inventory in June was 4.7 months delivery
—BePaal from 4.6 months in May
—Up from 4 months in June 2024
As shown in the graph below, the total active inventory has made considerable progress since the lows during the COVID-19 Pandemie, which made the housing market wild unhealthy. Personally, I do not consider that the home inventory is nationally low, as long as active entries can remain above 1.53 million. Now we are in the seasonal spic season for the NAR data and we will soon see the seasonal decrease. However, simply returning to the level of 2019 during the seasonal peak stock period is a victory for the American housing market.
Total existing home sales for June
The total existing home sales in June fell by 2.7% month by month to a seasonal annual percentage of 3.93 million. There was no change in sales year after year.
As we have discussed for many months, the existing houses sales for June and October, which are released from July to November, will have an extremely low comparisons on an annual basis to work with. If we see growth in the data on an annual basis, it doesn’t say much at all. Today’s report was flat year after year and ended the months of the decrease in the annual basis; However, this is mainly due to the fact that last year it is particularly bad for the existing home sales.
Conclusion
The housing market performs the tendency to perform better when the trend of the mortgage interest rate under 6.64% to 6%, which did not happen this year. This has led to some confusion with the growth reported today in purchase application data. I wrote this article to clarify the confusion around the 25 consecutive weeks of year-on-year.
With regard to the existing market for sale at home, the most striking stories are the growth of the inventory and the delay in price growth; If these trends did not take place this year, we would have more important problems. As time goes ahead, wages rise, households are formed, people get married and have children. When the mortgage interest rate drops to 6%, inventory growth and cooling of price growth is exactly what the doctor has ordered to help with the affordability of homes.
