Home buying statistics have changed recently. More home inventory has hit the market in the past few months and prices have continued to rise to record levels. The theory behind the increase in inventory is that sellers want to sell their homes before rising mortgage rates undermine unusually high prices.
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Mortgage rates almost certainly have begun to hurt the market for sellers. The National Realtors Association The Pending Home Sales Index recently released showed the figure in April dropped 3.9% from the previous month. Lawrence Yun, NAR’s chief economist, commented, “Pending contracts are telling, as they better reflect the timelier impact from higher mortgage rates than do closings. The latest contract signings mark six consecutive months of declines and are at the slowest pace in nearly a decade.”
The NAR’s home sales report for April said that among the changes in home buying economics is the number of people who can work from home. This ability was driven largely by the COVID-19 pandemic. Companies were forced to close their offices. Many companies remained concerned about health conditions and have not reopened. Part of the workforce has used this to relocate. In many cases, people have left expensive coastal cities like San Francisco and New York for less expensive cities inland.
One measure of housing supply and demand is the median number of days a house is in the market. In cities where home sales are brisk, this number can be below 10 days.
The NAR April report looked at the country’s 50 largest markets and the median number of days homes were on the market that month. The market with the highest figure was the New York metro area at 45 days. At the far end of the spectrum, the figure in Denver was eight days.
What happens to median listing days in the near future? Odds are that mortgage rates will continue to cool demand. If so, the figure will start to rise and will continue to for months, if not longer.
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