Report: Inventory and List Prices Drop Unexpectedly
CHICAGO – Housing inventories grew tighter in August following what had been a year of improvement – and median listing prices saw their largest July-to-August drop since 2012, according to realtor.com’s latest housing report.
The August 2019 housing trend report suggests that the drop occurred because some consumers are growing cautious about the economy.
Inventories of homes for sale fell 1.8% year-over-year in August, the first time in a year that inventories have dropped.
“The state of the housing market as we head into the latter half of 2019 is a tug of war between increased affordability and economic anxiety,” says George Ratiu, senior economist for realtor.com. “We’re starting to see this tension play out in our August data. On the one hand, lower interest rates have given buyers more purchasing power, which is contributing to August’s decline in national inventory. However, concerns over trade wars and cutbacks in corporate spending are causing some buyers to postpone their search. This is contributing to both the slowdown in prices, as well as the inventory decline, as buyers stay put in their current homes.”
The U.S. median listing price in August was $309,000, up 4.9% from a year ago but 1.8% lower than July. The 1.8% drop is the largest drop from July to August in seven years. Home prices usually increase from June until September.
“The size of this drop points to an earlier than usual deceleration of prices, likely attributed to recent concerns over economic uncertainty,” realtor.com notes.
A separate survey by realtor.com found that 11% of buyers expect a recession to strike by the end of the year, and 33% expect one in 2020. When a recession does hit, 56% of home shoppers said they would pause their home search until the economy recovered.
“These strong but opposing forces make it more difficult to predict what will happen in the second half of this year,” Ratiu says. “If the headwinds of economic uncertainty intensify, it could prompt a decrease in buyer demand and shift housing inventory’s current trajectory. But if increased purchasing power prevails, we could see even more inventory declines and intensified competition between buyers.”
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