Newsletter - September 2019
Home buyers in the market for properties under $200,000 could soon be out of luck, according to a new report from realtor.com.
Although interest rates are almost a full percentage point lower than they were a year ago and confidence in the economy higher, inventory is shrinking. In July, homes priced under $200,000 showed a 9.9% year-over-year decrease (while homes over $750,000 increased 6.6%). What’s more, lower-priced homes spent an average of just 56 days on the market, while higher-end homes sold in 81.
"July's data highlight tension in the housing markets between buyers eager to take advantage of lower mortgage rates and potential sellers concerned about slowing price growth," said senior economist for realtor.com George Ratiu.
The annual increase in the median home price slowed 5.5% last month, down 8.7% from July 2018.
Compounding the problem, homebuilders are not building enough lower-priced homes to meet demand.
"Even as builders report a firm demand for single-family homes, they continue to struggle with rising construction costs stemming from excessive regulations, a chronic shortage of workers and a lack of buildable lots," said Greg Ugalde, chairman of the National Association of Homebuilders (NAHB).
According to real estate brokerage Redfin, the supply of new homes for sale fell 1% in the second quarter, the first annual drop in six years. And prices of newly built homes have started to moderate after seven straight years of increases.
Just 417,453 single-family home construction permits were issued during the first six months of 2019, compared to 444,600 from the first half of last year, and the rising costs of construction materials — and a labor shortage — are making it difficult to build lower-priced homes.
So while the U.S. housing market should be booming, signs are pointing to a slowdown — especially for first-time buyers.
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