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N-Universe / Adobestock
After years of Americans struggling to make purchases in a seller's market, there are signs that the current housing market is swinging back toward favoring buyers. As recent market trends continue, buyers will find themselves with more homes to choose from and greater negotiating power.
Slower Home Sales Give Buyers an Edge
According to the National Association of Realtors (NAR), monthly existing-home sales in June fell 5.4% both month over month and year over year. What's more, every sales region in the country posted sales declines. Lawrence Yun, chief economist for the NAR, reported that homes are remaining on the market for longer and sellers are typically receiving fewer offers. The average home in June remained available for sale for 22 days, down from 24 days in May but up from 18 days a year earlier. The longer a home remains available for sale, the more time a buyer has to evaluate their options and negotiate a better deal—putting the power back into the hands of homebuyers.
More Options on the Market
The overall supply of available homes is also increasing, which is another sign that the country is headed into a buyer's market. By the end of June, the total inventory of homes available for sale climbed to 1.32 million units, up 3.1% from a month earlier and a staggering 23.4% from a year earlier. At the current sales pace, this represents a 4.1-month supply. Inventory levels have not been this high since May 2020, when inventory levels peaked at a 4.5-month supply. According to Yun, "Supply and demand dynamics are nearing a balanced market condition." Additionally, an increase in inventory gives buyers more options to choose from and reduces competition between buyers.
Sky-High Prices May Start to Fall
Although sales are declining and inventory is increasing, the median home sales price climbed to a record high of $426,900 in June, an increase of 4.1% year over year. This marked the second consecutive month of record-setting prices and the 12th consecutive month of year-over-year price gains. Experts, however, expect the trend to be short-lived. "Even as the median home price reached a new record high," commented Yun, "further large accelerations are unlikely."
Changing Buyer Trends and Falling Mortgage Rates
Mortgage rates have been fluctuating but are starting to trend down, increasing buyers' purchasing power and making homes more affordable, particularly for first-time buyers. This group represented 29% of all buyers in June, up from 27% in June 2023. According to the NAR "2023 Profile of Home Buyers and Sellers," the annual share of first-time buyers was 32%. Investors or second-home buyers, who account for many all-cash sales, were responsible for 16% of all purchases in June, down from 18% a year earlier.
Regional Sales Breakdown
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Northeast: Existing-home sales annual rate of 470,000; a decrease of 2.1% from May 2024 and 6% from June 2023. The median sales price of $521,500 represented a 9.7% increase from June 2023.
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Midwest: Existing-home sales annual rate of 920,000; a decrease of 8% from May 2024 and 6.1% from June 2023. The median sales price of $327,100 represented a 5.5% increase from June 2023.
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South: Existing-home sales annual rate of 1.76 million; a decrease of 5.9% from May 2024 and 6.9% from June 2023. The median sales price of $373,000 represented a 1.7% increase from June 2023.
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West: Existing-home sales annual rate of 740,000; a decrease of 2.6% from May 2024 but unchanged from June 2023. The median sales price of $629,800 represented a 3.5% increase from June 2023.
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