Mortgage rates have fallen in recent weeks, but Keller Williams chief economist Ruben Gonzalez said more consistent drops are needed for housing market activity to pick up further.
“Unless mortgage rates move lower and stay there, the housing market will remain slow and regionally uneven, with locked-in sellers and rising inventory limited both appreciation and the pace of home sales,” Gonzalez wrote.
The NAR’s chief economist Lawrence Yun said the higher sales were spurred by an “ever-so-slight” improvement in housing affordability. “Wage growth is now comfortably outpacing home price growth, and buyers have more choices,” he said. “Condominium sales increased in the South region, where prices had been falling for the past year.”
About half the country is now seeing real estate price reductions, Yun suggested, with homeowners faring well despite wider economic volatility. “Only 2% of sales were foreclosures or short sales,” he said, “essentially a historic low. The market’s health is supported by a cumulative 49% home price appreciation for a typical American homeowner from pre-COVID July 2019 to July this year.”
But affordability remains stretched for scores of American homebuyers despite the improving conditions. While average price growth slowed in July, prices have now increased for 25 consecutive months – and the share of first-time homebuyers continues to slide.