Aug 24, 2021 - Economy

A housing inventory rebound

Data: National Association of Realtors, FactSet; Chart: Axios Visuals
Data: National Association of Realtors, FactSet; Chart: Axios Visuals

The number of homes available for sale is rising, which is good news for prospective buyers who have been getting priced out of the market.

Why it matters: Home prices finally started to pull back in July as inventories rose. Prices had been surging over the last year as low mortgage rates and the sudden desire for more space caused housing demand to outstrip new supply.

By the numbers: Total housing inventory stood at 1.32 million units at the end of July, according to the National Association of Realtors. This was a 7.3% gain from June.

  • This was the sixth straight month of increases. Inventory is now 28% higher from its February low of 1.03 million.
  • Still, that's down 12% from its 1.50 million level a year ago.

What they’re saying: "Limits to available inventory and high prices are some of the factors likely responsible for the recent cooling in housing activity relative to several months ago," JPMorgan economist Daniel Silver says.

  • The median home was priced at $359,900 in July, down from $362,800 in June.
  • "With more homes on the market, price appreciation has moderated ever so slightly, taking price gains down a notch from the mesosphere to the stratosphere," Wells Fargo senior economist Mark Vitner says.

Yes, but: As the chart above shows, inventories are still very low. Meanwhile, the pace of existing-home sales is up 1.5% from a year ago, and the median home price is still up 17.8% during the period.

Between the lines: Conditions are not even across the housing market.

  • "The current dearth of inventory is worse in the affordable segment of the housing market," ADP chief economist Nela Richardson tells Axios. "This is also where many first-time buyers, who tend to drive the housing market, are looking."

What to watch: Home sales volumes are likely to move sideways through the end of the year, Oxford Economics lead U.S. economist Nancy Vanden Houten says.

  • "Going forward, the market for existing homes will be supported by strong demand and mortgage rates that remain relatively low," she writes.
  • "However, inventory remains lean despite the increase in July, and that will keep a floor under home prices, which are unaffordable for many prospective buyers."
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