For more than a year now, the U.S. housing market has been a sellers’ bonanza, but the balance may finally be shifting.
Despite record high home prices, new listings recently surpassed 2019 levels for the first time in 2021. New listings of homes jumped 4% in the four-week period ending July 4 from a year earlier, according to Redfin.
Sales are still very brisk, but the average time a listing spends on the market has leveled off at 17 days after falling for 18 straight weeks between February and June. The share of homes sold above list price has also flatlined.
Mortgage rates have dropped near record lows again. With more new listings, buyers who threw in the towel may want to look again because the market is tilting more in their favor.
Lately, home price appreciation has been taking the bang out of the housing boom. Prices rose about 14% year-over-year in June, while mortgage applications dropped 7%, with purchase applications slumping 17%.
Existing home sales posted their third consecutive monthly loss in April, falling 2.7% The annual rate has declined from 6.66 million in January to 5.85 million. Despite the decline, demand is still up 20% compared to 2020. Listings increased 10.9%.
Despite the seeming market woes, May’s pending home sales surprised with an 8% jump. Pending home sales are based on purchase contracts signed, so numbers lag a bit. The affected existing home sales numbers will be released on July 29.
Construction spending dipped slightly in May $1.545 trillion, down 0.3% from April, but 7.5% higher than the prior May. That was about the time the pandemic housing boom began, catching homebuilders by surprise.
The construction industry has been able to catch up somewhat since, with privately funded residential spending reaching a seasonally adjusted pace of $751.747 billion in May, with single-family houses making up $402.3 billion, a monthly gain of 0.8%.
Affordability continues to be a concern: Home prices hit a record high of $352,975 in June, up 24% year over year.
The outlook for 2021 housing is a bit uncertain. High home purchase demand due to last year’s delayed homebuying season plus the boost from stimulus checks have combined to keeps sales hot.
As these factors dissipate, demand may wane. However, consumer preference is always uncertain, and could be affected by labor forces and increasing home equity.
Job growth increased at a faster rate in June thanks to a burst in hiring for the hospitality sector. Bars, restaurants, hotels, and related businesses took the hardest hit from the pandemic but have shown strong gains during reopening.
First-time jobless claims totaled 364,000 the last week of June, a new pandemic-era low and a decline of 51,000 from the previous week, indicating continued improvement in the U.S. jobs market.
The average homeowner gained about $33,400 between the first quarter of 2020 and the first quarter of 2021. Homeowners with mortgage loans, which account for about 62% of all homeowners in the U.S., saw a 19.2%, for a collective gain of $1.9 trillion.
Economically speaking, the third quarter of 2021 and the second half of the year began with upbeat economic data and a broad-based rally. All three major U.S. stock indexes ended the session in positive territory.