With the release of last month’s real estate market report, housing inventory fell to a new record-low level. Meanwhile, both existing and new home sales disappointed as prices jumped higher.
As the United States first experienced the coronavirus pandemic in 2020, the housing market suffered. One year later, the United States surged through an unprecedented economic rebound. In the wake of the rebound, 2021’s real estate market performed very well. In fact, 2021 saw the United States reach its best year in home sales since 2006.
However, housing is a game of give and take. And now, the market is facing another slowdown. With mortgage rates exceeding 5%, loan applications declined considerably. In addition, existing home inventory fell to a record-low level in March. Because of this, prospective home buyers face tougher competition for fewer properties.
Existing & New Home Sales Decline
In March 2022, the latest real estate market reports showed a decline in both existing home sales and new home sales. In February 2022, existing home sales dropped down 7% from January of this year.
Similarly, new home sales decreased slightly from January by 2%. However, this marked the second month in a row of declines for new home sales. Currently, the annualized rate of new home sales sits at 772,000. Thus, new home sales missed the consensus forecast of 810,000.
Median Home Prices Rise Further
Despite the declines in sales activity, March 2022’s housing data showed significant price jumps for both existing homes and new homes. Worth noting, the median existing-home price skyrocketed 15% higher. Now, the existing home price, according to March’s data, is at $357,300.
On the other hand, the median new-home price rose 11% higher. Just three months into 2022, new home prices reached $400,600.
Housing Inventory Fell to Record-Low Level
Since the 2008 Housing Bubble, the United States dealt with a severe lack of inventory. To make matters worse, housing inventory levels fell 16% from a year ago. currently, housing inventory fell to a 1.7-month supply throughout the United States. Therefore, housing inventory plummeted well below the 6.0-month supply that investors see as a healthy balance between home buyers and home sellers.
With housing inventory falling to a record-low level, investors watched the latest housing starts report closely. Overall, the latest housing starts report showed hints of optimism, indicating a 7% increase from January to February. In doing so, housing starts rose to their highest level since 2006.
Higher prices and shortages for land, materials, and skilled labor remained obstacles to a faster pace of construction.
Real Estate developers point to land shortages and higher prices as one of the primary issues for construction pace. Additionally, developers face materials shortages due to ongoing global supply chain issues. Finally, the strong labor market spurs challenges finding skilled labor as well.
As a sign of progress, inventory levels unexpectedly rose to 407,000 units for new homes. Statistically, this is the highest level since 2008. While over 90% of these properties didn’t complete (or possibly start) construction yet, this does show a sign of good things to come for the United States real estate market.
For questions on the real estate market, contact the title and escrow specialists at Plymouth Title Guaranty Corporation.
Information accredited to MBSQuoteline.
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