The fundamental principles of supply and demand have fueled the real estate market to unprecedented levels. But, maybe the jump in June inventory sets the stage for some moderation to a more ‘normal’ pace of activity heading into the second half of 2021. According to Realtor.com This Week in Real Estate new listings in June increased 10.9% compared to May. While total supply is down 9% new listings in June were up 36% compared to June of last year. Below are a few newsworthy events from the final days of June and first days of July that influence our business:
Pending Home Sales Bounce Back 8.0% in May. Pending home sales rebounded strongly in May, reaching the highest reading ever for the month of May since 2005, according to the National Association of Realtors. All four U.S. regions registered both month-over-month increases and year-over-year gains for pending home sales contract transactions for the month of May. The index in the West increased 10.9% in May to 102.0, up 12.5% from a year prior. The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, rose 8.0% to 114.7 in May. Year-over-year, signings increased 13.1%. “May’s strong increase in transactions – following April’s decline, as well as a sudden erosion in home affordability – was indeed a surprise,” said Lawrence Yun, NAR’s chief economist. “The housing market is attracting buyers due to the decline in mortgage rates, which fell below 3%, and from an uptick in listings.”
Epic Housing Shortage May Finally be Starting to Lift, as Surprising Number of New Listings Hit Market in June. In June, new listings increased 5.5% year over year and 10.9% compared with May, according to Realtor.com. Among the nation’s larger cities, the 10 markets with the highest new listings increases posted gains of 20% or more from a year ago. “Although there’s still a significant shortage of homes for sale and home prices just hit a new high, our June data report shows good news on the horizon for buyers,” said Realtor.com senior economist George Ratiu. “The improvement we saw in new listings growth from May to June shows sellers are entering the market historically later in the season, which could mean we’ll see home buying continue into the fall as buyers jump at new opportunities,” added Ratiu. The unexpected new supply is certainly welcome news for homebuyers, many of whom have been sidelined in bidding wars, but the market is still extremely lean. The inventory of homes for sale was down 43.1% year over year at the end of May, representing 415,000 fewer homes for sale on a typical day in June. That is, however, an improvement from the more than 50% declines seen in March, April, and May. New listings, again, were higher, but still well below the pre-pandemic average for June. New listings were up 36% in June from a year ago, but total supply is still down 9%.
Consumer Confidence Rises to Highest Level Since March 2020. Consumer confidence continued its upward trend and approached to pre-pandemic level in May, as consumers became more upbeat about the current and future economic conditions and job market. Though short-term inflation expectations increased, it had little impact on consumer confidence or spending intentions. The share of consumers planning to buy homes, cars, and major appliances all increased, suggesting consumers will continue to support economic growth in the short-term. The Consumer Confidence Index, reported by the Conference Board, rose 7.3 points from 120.0 to 127.3 in June, the highest level since the start of COVID-19 pandemic.
