Existing Home Sales Plummet
The existing home sales in the US have dropped to an annualized rate of 4.1 million, marking a 30-year low. Despite this decline, the median home price has reached an all-time high of $419,000.
Supply and Demand Imbalance
Mitch Rishel explains that the unusual trend of rising home prices amidst declining sales is due to a supply and demand imbalance. The current supply stands at 3.5 months, which has slightly increased but remains insufficient to meet the demand driven by migration across the country.
Impact of the Stock Market
The stock market’s performance may also be influencing the housing market. A significant rally in the stock market has led some investors to take their gains and invest in rental properties. However, typical home buyers do not rely on stock market gains for down payments.
Mortgage Rates and Housing Market Relief
Mortgage rates have seen minor declines over the past three weeks, currently standing at 6.7%. The Federal Reserve has not lowered rates to ease the housing market, but the free market, particularly the bond market, has provided some relief. Mitch Rishel notes that for many buyers on the sidelines, the inflection point for mortgage rates is around 5%.
Hidden Costs of Selling a Home
Selling a home involves costs that many sellers may not anticipate. Beyond brokerage commissions, sellers often need to make concessions for repairs identified during inspections. On average, these repairs cost around $7,200. Combined with closing costs and brokerage commissions, sellers typically retain only 85% of the sale price.
