Why It’s a Better Time for Buyers on a Budget to Purchase a Home
Those thinking about buying a home have probably heard all the tales of woe from other buyers out there: Sticker shock, getting outbid on the home of their dreams, or not being able to find a property with everything they were looking for within their budget. Still, those stresses may be easing somewhat now that we’re past the most competitive season for home buying.
The median price of an existing home dropped for the second month in a row to hit $253,500 in August after reaching an all-time high earlier this summer, according to the most recent National Association of Realtors® report. The median price of a previously lived-in abode had hit $263,300 in June.
“Median sales prices typically decline a bit heading into the fall,” says realtor.com Chief Economist Danielle Hale. “Summer is a big time for home purchases, so that families settle in before school starts in the fall. In the fall, the types of homes that sell are smaller for people without kids. So they tend to be less expensive.”
Existing homes are also cheaper than newly constructed ones that come with all the latest appliances and finishes. The median price of a new home was $313,700 in July—23.7% more than an existing one, according to the most recent data available from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Still, there wasn’t much dramatic movement on the number of home sales. Sales of existing homes dipped 1.7% from July to August, due to the dearth of available homes on the market, according to the seasonally adjusted numbers in the report. But they were up 0.2% over August 2016. Meanwhile, monthly sales of single-family homes, those standalone homes that usually come with backyards, dropped 2.1% from July, but rose 0.4% annually. Sales of condos and co-ops rose 1.7% from the previous month, but were down 1.6% from last year.
(realtor.com® only looked at the seasonally adjusted numbers for home sales. They’ve been smoothed out over 12 months to account for seasonal fluctuations.)
“Steady employment gains, slowly rising incomes and lower mortgage rates generated sustained buyer interest all summer long, but unfortunately, not more home sales,” Lawrence Yun, NAR’s chief economist, said in a statement. “What’s ailing the housing market and continues to weigh on overall sales is the inadequate levels of available inventory and the upward pressure it’s putting on prices in several parts of the country.”
The number of monthly sales of the abodes jumped the most in the Northeast. They increased 10.8% in the region from July as buyers dropped a median $289,500 on homes. Sales also edged up 1.4% from August 2016.
In the Midwest, the number of monthly sales jumped 2.4%, while annual sales notched up 0.8%. The median home price in the region was the lowest in the country at $200,500. Meanwhile, sales fell 4.8% in the West from July and were down 0.8% from the previous August. The median home price was $374,700.
The South, which has been growing by leaps and bounds as more companies and workers move to the lower-cost region, saw the biggest drop in buyers signing on the dotted line. Monthly sales fell 5.7% and annual sales were down 0.9%. The median price was $220,400. That’s likely due to Hurricane Harvey which destroyed and damaged an estimated 200,000 homes. The storm delayed and scrapped sales.
“Some of the South region’s decline in closings can be attributed to the devastation Hurricane Harvey caused to the greater Houston area,” Yun said. “Sales will be impacted the rest of the year in Houston, as well as in the most severely affected areas in Florida from Hurricane Irma.”