The Value of Previously-Owned Homes Peaks as Sales Drop for the Fifth Time This Year
The price of previously-owned properties has reached an all-time high after another unexpected drop, the fifth one in just six months. Much to the surprise of economists and homeowners alike, the median sales price has risen to $267,300. This marks a 3.6 percent increase from last year.
According to the National Association of Realtors in Washington, D.C., the contract closings dropped by 0.4 percent, down to an annual rate of $5.19 million. The steady, 14-years-long sales decline signifies that the U.S. housing market is still in turmoil. Despite the overall wage increases in recent years, as well as lower mortgage rates, buyers are still struggling to find a suitable property at an affordable price.
Despite everything, Zillow Director of Economic Research, Skylar Olsen doesn’t believe the situation to be alarming as of yet. She emphasizes that it’s too early to make an accurate estimate and say if we’ve hit a new, nationwide home value peak or if this is just a hurdle that we must overcome.
The potential silver lining lies in the fact that the supply of homes increased by 1.7 percent compared to last year. However, the inventory of 1.83 million homes on sale still proves insufficient. The demand for these properties is increasing at an even faster rate, which is evident from the average time they spend on the market. In 2018, these properties had a “life span” of 26 days, whereas now they remain listed for 24 days on average.
What somewhat explains this trend is the tendency of buyers to opt for brand-new homes in recent past. The new-home construction surpassed all estimates in April. Simultaneously, permits for single-family homes have dropped to the lowest they’ve been in three years, making this one of the toughest periods for families looking to settle down in new and previously-owned homes alike.