As June sees an increase in listings, the housing shortage begins to ease.

Jul 20, 2022

It is finally beginning to ease the historic housing shortage that was caused by slow construction and strong demand due to the pandemic.

Active listings for homes jumped 19% in June, the fastest annual pace since Realtor.com began tracking the metric five years ago. The number of listings increased by 4.5% in June compared to a year ago, which is the fastest annual increase since Realtor.com began tracking the metric five years ago. However, inventory is only half of what it was a year ago.

Some markets saw the largest surges of demand during the pandemic. Now, they are among those experiencing the greatest supply increases: Austin inventory was almost 145% higher than a year earlier, Phoenix inventory was up 113%, Raleigh inventory was nearly 112% higher. Other markets are still experiencing supply drops: Miami is down 16% and Chicago is down 13 percent, while Virginia Beach is down 14 percent.

"We expect to witness additional inventory growth, building on the acceleration seen throughout June," Danielle Hale chief economist at Realtor.com stated. She also said that supply gains increased as the month progressed.

Hale also suggested that more homeowners might decide to sell, increasing supply as buyers struggle with rising costs and finding homes that meet their needs.

The skyrocketing home prices are not being eased by the increasing supply. According to Realtor.com in June, the median listing price was $450,000. The annual gains are slightly slowing but still rising by almost 17%. Partly because of the rise in larger and more expensive properties.

According to a report from ATTOM, a property information provider, the cost of buying the median-priced home required 31.5% of the average U.S. worker's wage in the second quarter. This is the highest percentage recorded since 2007, up from 24% last year, and the biggest increase in two decades. Lenders view a 28% debt/income ratio as the threshold for approval of a mortgage. It's why some potential homebuyers today are no longer qualifying for a mortgage.

On June 21, 2022, a sign reading "for sale" is displayed in front of a Miami home. According to the National Association of Realtors, sales of existing homes dropped 3.4% to a seasonally adjusted annualized rate of 5.41 million units. Sales were 8.6% lower in May 2021 than they were in May 2021. Due to a decline in existing-home sales, the median house sale price was $407,000. This represents a 14.8% increase over May 2021.

Joe Raedle

According to ATTOM. 97% of the country saw their affordability for buying a house fall in the second quarter. This is an increase from 69% in that quarter a year earlier and the highest reading since before the Great Recession.

ATTOM calculates affordability for average wage earners. It determines how much income is needed to cover major home ownership expenses for a median-priced house. This assumes a loan of 80% and a maximum of 28% debt-to-income ratio.

"With interest rates almost doubling, homebuyers are faced with monthly mortgage payments that are between 40% and 50% higher than they were a year ago -- payments that many prospective buyers simply can't afford," said Rick Sharga, executive vice president of market intelligence at ATTOM.

A few factors could hinder inventory growth. These include potential sellers pulling back, or waiting for the market to stabilize again. However, Hale from Realtor.com stated that both new and pending sales of homes were up this month. This could indicate that some people feel the right time to purchase.

Hale stated that home buyers today could be more motivated as they see more options and have higher expectations for future mortgage rates.

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