A historic housing shortage caused by the one and two blow of slow construction and the strong demand induced by the pandemic is finally starting to ease.
Active housing listings rose 19% in June, the fastest annual rate since Realtor.com began tracking the metric five years ago. And the number of new listings during the month finally surpassed typical pre-Covid levels, 4.5% more than a year ago. The overall inventory, however, remains at about half the levels before Covid.
Some markets that saw the largest increases in demand during the pandemic are now among those that saw the largest gains in supply: Austin’s inventory rose nearly 145% from a year ago, Phoenix rose 113% and Raleigh almost 112%. Other markets are still experiencing a drop in supplies: Miami has fallen 16%, Chicago 13% and Virginia Beach 14%.
“We expect to see additional inventory growth in July, based on the accelerated improvements seen throughout June,” said Danielle Hale, chief economist at Realtor.com, adding that supply gains increased as the month progressed.
And Hale said even more homeowners could decide to sell, adding new supplies as buyers face higher costs and difficulty finding homes that fit their budgets.
However, the expanding supply is not yet reducing the prices of very high housing. The average listing price in June hit another record $ 450,000 according to Realtor.com. Annual earnings are moderating slightly, but still rising by almost 17%. This is partly because the proportion of larger, more expensive homes is increasing.
According to a new report from ATTOM, a real estate data provider, the costs of owning housing at an average price during the second quarter required 31.5% of the average U.S. wage. This is the highest percentage since 2007 and more than the 24% of the previous year, which is the biggest jump in more than two decades. Lenders generally see a debt-to-income ratio of 28% as the ceiling for approving a mortgage. That’s why some potential home buyers today no longer meet the requirements for a mortgage.
As a result, the affordability of buying a home in the second quarter fell by 97% in the country, according to ATTOM. This is an increase from 69% in the same quarter a year ago, and the highest reading since shortly before the fall of housing in the Great Recession.
ATTOM calculates affordability for average employees by determining the amount of income needed for the main expenses of owning a home in a mid-priced home, assuming a loan of 80% of the purchase price and a maximum debt ratio to income of 28%.
“With interest rates almost doubling, homebuyers are facing monthly mortgage payments that are between 40% and 50% higher than a year ago, payments that many potential buyers simply can’t afford. allow, ”said Rick Sharga, executive vice president of market intelligence at ATTOM.
Some factors could frustrate continued growth in inventory levels, including a decline in potential sellers who might decide to wait for the market to strengthen again. Still, Hale of Realtor.com noted that sales of new, pending homes increased this month, so some people might think now is the time to buy.
“As expectations of higher future mortgage rates rise, current home buyers could be more motivated, especially now that they see more options to choose from,” Hale said.