The potential for more growth is on the horizon since homebuyer demand is still strong. Learn more about NAR’s latest report.
Buyers of homes appear unaffected by the rising cost of mortgages and the lack of inventory, grabbing any property they can. The pending home sales indicator, which is a forward-looking measure of sales at homes from contract signings — posted a 0.9 percentage increase in July, which is the second consecutive month with gains, as The National Association of REALTORS(r) released on Wednesday.
“The small gain in contract signings shows the potential for further increases in light of the fact that many people have lost out on multiple” chances to purchase a home due to bidding wars that are getting more intense, According to NAR chief economist Lawrence Yun. “Jobs are increasing which, in turn, is expanding the pool of potential home buyers. However, the rising rates for mortgages and the shortage of inventory has temporarily impeded the prospect of purchasing a home for many.”
The rising cost of homes and mortgage rates — which recently surpassed the 7% mark, are forcing some buyers off the market. The number of homes for sale is down 14% when compared to the same time last year, according to NAR’s data. However, a portion of this decline can be blamed on the low inventory of existing houses, which decreased by 15 percent in July compared to one year ago.
In the face of a shortage of existing homes for sale, consumers who don’t have a choice are considering new home construction to get greater options. The sales of new single-family houses in July were by 32% over one year ago, according to the Commerce Department recently reported.
“New-home sales were solid in July because of an ongoing housing deficit in the U.S. and a lack of resales stemming from many homeowners electing to stay put to preserve their low mortgage rates,” states Alicia Huey, chairman of the board of the National Association of Home Builders.
The median price for a new home decreased by 9% per year in July to $436,700. This was close to the median cost of an existing house, which was set at $406,700.
Regional Outlook
It is believed that the South, as well as the West, have experienced the largest increases in contract signings. In July, the number of pending home sales increased in these two regions while falling across areas like the Northeast and Midwest, according to NAR.
“The West region experienced a meaningful price decline in the past year, and buyers are quickly returning as a result,” Yun states. NAR recently revealed that existing home transactions in the West increased by 2.7 percent in July in comparison to June. Meanwhile, the median home value is at $610,500.
However, even though the housing market is showing lower inventory with higher interest rates on mortgages in comparison to last year, the four main regions in the U.S. posted a decline in home sales pending in July as compared to the year before.
When buying, perform due diligence. If you have clients who are considering purchasing an old property for an affordable price, make sure an investigation is done. Engage a reliable engineer and architect to examine the parcel in detail. Also, make contact with local officials and ask for any public records dating prior to the fire or other catastrophe. A town hall, or the fire department might have information on the causes of the disaster as well as how large the damage was. Also, look over any previous permits taken from the property to determine if there had been any construction projects that needed to be approved either prior to or after the catastrophe struck.
Prepare yourself. Of course, the best method to maximize profits is to avoid catastrophe in the first place. Property owners can achieve this by taking proactive steps. For instance, be acquainted with where shutoff valves are. Turning off gas and water during an emergency could make a huge difference.
Additionally, make sure you have a clearly defined escape plan. Replace the batteries in smoke detectors as well as carbon monoxide detectors once a year. Property owners should ensure they understand the nuances of their insurance coverage.
Nobody wants to be in the middle of an accident. In the event that one occurs, there are actions to follow that ensure that the benefits of repairs are increased. In the event of a flood, fire, or other catastrophe strikes, take these tips to your memory.