As we are into the middle of the year, the real estate market has been maintaining a trend of strong demand coupled with the challenges of lower inventory. As a result, pending home sales have been consistently decreasing by a slight amount due to the lack of homes available for sale according to the National Association of Realtors.
Lawrence Yun, NAR chief economist, says this year’s spring buying season will go down as one of unmet expectations. “Pending home sales underperformed once again in May, declining for the second straight month and coming in at the second lowest level over the past year,” he said. “Realtors® in most of the country continue to describe their markets as highly competitive and fast moving, but without enough new and existing inventory for sale, activity has essentially stalled.”
It has been discussed that the spring’s activity has been a supply issue and not one of weakening buyer demand. If that were the case, price increases would have been showing a slowdown and we would see homes remaining on the market for a longer period of time.
“With the cost of buying a home getting more expensive, it’s clear the summer months will be a true test for the housing market. One encouraging sign has been the increase in new home construction to a 10-year high,” added Yun. “Several would-be buyers this spring were kept out of the market because of supply and affordability constraints. The healthy economy and job market should keep many of them actively looking to buy, and any rise in inventory would certainly help them find a home.”
The forecast for existing home sales for the year 2018 is now expected to decrease by 0.4% from last year. The median home price is expected to increase by 5%.