Why Are Existing Home Sales Tanking?
*check in tomorrow, for How to Buy a Home in a Seller's Market.
I wouldn’t exactly call it a plummet, but there’s been a definite, noticeable decrease in existing home sales. This is not to say that home buyers are disappearing, not even close, it’s to replay my mantra since February… inventory of existing homes for sale, that is to say the number of listings available for purchase, is far lower than average. We knew that eventually the number of potential home buyers would begin to deplete the supply of homes available. Simple math. And that as a result, home prices would rise. Simple economics.
Existing-home sales dropped in April, dragged down by virtually absent supply, the National Association of REALTORS® (NAR) reports.
Existing-home sales totaled 5.57 million, a 2.3 percent decrease from March, but a 1.6 percent increase from one year prior. Inventory increased, however, by 7.2 percent to 1.93 million—though still 9 percent below one year prior.
The statistics released by the NAR says it all. If you’re thinking of selling your home get off the fence! Now is the time. Fall may be too late.
“Last month’s dip in closings was somewhat expected given that there was such a strong sales increase in March at 4.2 percent, and new and existing inventory is not keeping up with the fast pace homes are coming off the market,” says Lawrence Yun, chief economist at NAR. “Demand is easily outstripping supply in most of the country and it’s stymieing many prospective buyers from finding a home to purchase.”
Being up against multiple offers, especially in the $200,000 and under price ranges, first-time-home-buyer territory, is not uncommon, and in fact is expected. Additionally in the neighborhood of $275,000 – $450,000, mid-range prices, homes are moving far more rapidly than at this time last year.
Working with a fair number of first-time-home-buyers, I spend much of my time in negotiations, but it’s getting to the negotiation stage that’s the challenge. You have to have your offer considered in order to start haggling.
First-time homebuyers comprised 34 percent of all existing-home sales nationwide in April.
Inventory is currently at a 3.8-month supply. Existing homes averaged 29 days on market in April, five fewer days than in March and 10 fewer days than one year prior. Non-distressed homes took 28 days to sell. All told, 52 percent of homes sold in April were on the market for less than one month.
“REALTORS® continue to voice the frustration their clients are experiencing because of the insufficient number of homes for sale,” Yun says. “Homes in the lower- and mid-market price range are hard to find in most markets, and when one is listed for sale, interest is immediate and multiple offers are nudging the eventual sales prices higher.”
“On the supply side, new homes are predominantly being built for the mid to upper-price range, but on the demand side, buyers are increasingly seeking low to moderately-priced homes,” says Joseph Kirchner, senior economist at realtor.com®. “This mismatch makes landing an affordable home that much tougher, and is keeping many would-be buyers out of the market.”
The metropolitan areas with the fewest days on market in March, according to data from realtor.com, were San Jose-Sunnyvale-Santa Clara, Calif. (23 days); San Francisco-Oakland-Hayward, Calif. (25 days); Denver-Aurora-Lakewood, Colo. (27 days); and Seattle-Tacoma-Bellevue, Wash. (28 days).
The median existing-home price for all types of houses (single-family, condo, co-op and townhome), at the same time, was $244,800—a 6 percent increase from one year prior. The median price for a single-family existing home was $246,100, while the median price for an existing condo was $234,600.
Single-family existing-home sales came in at 4.95 million in April, a 2.4 percent decrease from 5.07 million in March and a 1.6 percent increase from 4.87 million one year prior. Existing condo and co-op sales came in at 620,000, a 1.6 percent decrease from March, but a 1.6 percent increase from one year prior.
Twenty-one percent of existing-home sales in April were all-cash, with 15 percent by individual investors. Five percent were distressed.
Existing-home sales in the Midwest rose 3.8 percent to 1.36 million, with a median price of $194,500. Existing-home sales in the Northeast fell 2.7 percent to 730,000, with a median price of $267,700. Existing-home sales in the West fell 3.3 percent to 1.18 million, with a median price of $258,600. Existing-home sales in the South fell 5 percent to 2.30 million, with a median price of $217,700.
I’ve been in the industry long enough to know that the Real Estate market does not remain unchanged for long. Everything is a cycle and this, right now, is the cycle of the Seller’s Market. It won’t last. But I promise you it will be back. What I can’t promise is when, could be next Spring, could be two. No guarantees but an educated guess says it won’t be Fall, it never is.
My final message to home sellers is this, a quote from author Stewart Stafford ““The quickest way to run out of time is to think you have enough of it”
*check in tomorrow for How to Buy a Home in a Seller's Market.
For more information, Call or Text: 602-999-0952
Bill Salvatore / Arizona Elite Properties
Residential Sales, Marketing, and Property Management
For more information, please visit www.nar.realtor. Reprinted with permission from RISMedia. ©2017. All rights reserved.
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