A home for sale in Laguna Woods, CA managed by escrow.

Scott Mir | CNBC Money

As anyone who has bought a home in the resale market knows, there are very few options. They’re about to get slimmer.

According to Realtor.com, the number of homes for sale this month is actually up 7% from last June. But just last week, that comparison turned negative, with the number of homes for sale below year-ago levels for the first time in 59 weeks.

The number of new listings in the last week of June was down 29% from a year earlier. The decline was steeper than in previous weeks.

Homeowners have little incentive to sell their homes as mortgage rates continue to soar, surpassing 7% for a 30-year fixed again on Thursday, according to Mortgage News Daily. The vast majority of mortgage homeowners have interest rates below 4%, some even below 3%.

A tighter housing market ahead means house prices are unlikely to cool. Prices are up more than 45% from pre-pandemic levels and peaked last June. As mortgage rates doubled in a matter of months, interest rates started to drop. But prices bottomed out in January, even as interest rates remained high and sales slowed, according to the latest S&P Case-Shiller home price index.

“The continued recovery in home prices is broad-based,” Craig Lazzara, managing director of S&P Dow Jones Indices, said in a release.

for saleA measure of existing home signing contracts fell nearly 3% in May from April, according to a report Thursday from the National Association of Realtors.

“Despite the slow pace of pending contracts, the housing market remains resilient, with about three offers per listing,” said Lawrence Yun, NAR’s chief economist, in a release. “Housing inventory is low continue to impede the full realization of housing needs.”

Homebuilders in the US, on the other hand, are the biggest beneficiaries of the tight market, with sales up 12% in May from April, according to the US Census. Higher mortgage rates haven’t been a big factor because builders, some of which have their own mortgage divisions, have been driving down rates for buyers. In May, twice as many homes were sold but not yet under construction than a year earlier.

While single-family housing starts have finally picked up, they remain well below historical levels. Builders have also been under-constructing since the Great Recession, meaning the market was already undersupplied long before the recent pandemic-induced housing run.

Peter Boockvar writes: “The bottom line is that while homebuilders are excited about the need for more supply, the existing housing market is sluggish and experiencing severe stagflation with few transactions, but Prices are still high,” said Chief Investment Officer, Bleakley Financial Group.

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