The latest housing market forecast is in, there are strong signs that property buyers have had enough of a super-competitive market with record-breaking home price rises. As of the week ending June 18, the average US home price stood at $358,766, a record high and 24 percent up from the same period in 2020.
Amid what now is beginning to look like an uncontrollable home value inflation, some homebuyers appear to be growing tired of a market so firmly stacked against them. Although US homes are still selling very fast and competition is brutal for every home going, it's not quite as intense as it was back in the spring, which saw peak buyer demand and a serious inventory shortage.
What is behind a drop in buyer demand? There are several factors that are contributing to a relative slowing of the market. RedfinPhoenix real estate agent John Biddle thinks that the shifting summer priorities are playing a part, as is plain and simple fatigue: 'Now that things are opening up again and the summer is almost here, people have other priorities, like going on vacation. Plus, many homebuyers are frustrated and tired of competing, so they’ve stepped back—for now at least.'
This isn't to say that the housing market has slowed down in a way to make things substantially easier for buyers – only that 'offers no longer pour in the day a home hits the market', which was the case for many months. You'll still have to move very quickly if you see a home that interests you.
Redfin Lead Economist Taylor Marr is also cautioning buyers against excessive optimism, pointing out that while demand is unlikely to go back to the unsustainable spring levels, it is still very high: 'Seasonally adjusted homebuyer demand is unlikely to rebound to the levels we saw earlier in the spring. While some buyers will find reprieve in less intense bidding wars this summer, others may be disappointed that homes remain hard to find.'
Fewer buyers and more sellers is exactly what the housing market needs right now. There's still an enormous demand for too few homes, with the latest figures showing that inventory nationwide is down 31.2 percent from a year ago, which represents the fourth consecutive month of year-over-year national inventory declines of over 30 percent.
While there are early signs that the inventory is growing, it still will take a long time for supply and demand to even out in any meaningful way. Housing market experts at Zillow explain that 'The combination of tight supply and high demand is doing more than just pushing home values up at a record pace — it is also helping push the amount of time homes spend on the market before selling to record lows.'
We said before that it will be small consolation to buyers that at least homes aren't bought the same day they're sold – but the reality is still not far off that. According to Zillow, 'the typical time for a newly listed home to go under contract dropped to just six days nationwide in May, one day shorter than in April. At just three days, typical time on market is shortest in the hot Midwest metros of Cincinnati, Kansas City and Columbus.'
Ultimately, if you need to move, then there's no point holding off buying a home. However, if you are flexible at all, it makes a lot of sense to sit tight until a sufficient decline in demand and growing inventory as more sellers enter the market will begin to drive home prices down.