The Truth Behind Declining Home Sales
The real estate market has truly been historic. Many anticipated the housing market to collapse because of the pandemic as states shut down and many became unemployed. In spite of this, the opposite happened. The government stepped in to stop foreclosures and used the power of the Federal Reserve to drop mortgage rates. This caused a surging real estate market. Some are still worried that today’s housing market is too good to be true. For them, the latest data about the number of home sales might be a good sign that the real estate market is in trouble. However, the latest data about home sales does not give you the full picture of the housing market. The team at Streamline Realty is here to tell you the truth about recent data that suggest home sales are declining. The reality for homebuyers and homeowners is much better than you would think.
New Data Indicates Home Sales are Declining
Existing home sales dropped in February. The latest round of data says that this trend continued in March and existing home sales continued to decline. We can see that home sales dropped 3.7% with a seasonally adjusted rate of 6.01 million units last month. This is the lowest it has been since August 2020. The march decline was flagged by a large decrease in the amount of signed contracts and applications for purchasing home loans. These drops in signed contracts and home loan applications are from February reports.
February reports also revealed that closed sales of existing homes dropped by 6.6% which is larger than expected. We are currently in what was thought to be a historically busy spring housing market, but the data says otherwise. Homeowners are not putting their properties up for sale as fast as they usually do during the spring. While this data is true, it does not give you a full picture about the state of the housing market.
Why Have Existing Home Sales dropped?
Existing home sales have declined because of a lack of supply. Existing home supply on an annual basis has gone down by 28%. Although supply is down, many people still want to buy a home and demand is through the roof. Demand to buy a home is high because mortgage rates are near historic lows. Since there is still a high demand, the real estate market is thriving with potential room to grow.
The combination of high demand and a small supply is driving up the price of homes. This creates incredible opportunities for homeowners. Homeowners can consider selling their home and taking advantage of a seller’s market. They can also sit back and watch as the value of their homes increase, which would in turn increase their equity. Americans have already gained a lot of home equity over the past year because of the red hot real estate market. This should encourage homeowners and potential buyers to make moves in today’s real estate climate.
Existing Home Sales only Part of the Picture
Even though existing home sales are declining, new home sales are increasing.This was a significant milestone, as the numbers recovered from a 18.2% dip that happened in February. The Census Bureau released data pointing to how newly constructed homes rose by 20.7%. This amounts to a seasonally adjusted rate of 1.021 million units. This data is extremely good news for people interested in buying a home. It marks a 66.8% higher increase than sales in March of 2020.
Sales are increasing and projected only to rise in the upcoming months. Econoday reports that it projected 820,00 to 950,000 new home sales. The distinction between existing home sales and new home sales is important because it shows that the future is bright. New home sales are an indicator that despite previously existing home sales declining, there are still opportunities for homeowners. This is further proof that there is still a lot of demand in the market to buy a new home. Again, this is great news for existing homeowners and potential home sellers.
The Truth Behind Declining Home Sales
All of the data shows us that there is no reason to fear for the future of the housing market. Initially, the data can appear scary. The data makes you wonder why home sales are declining. However, when you peel back the data, we see that home sales are declining because of a lack of supply. This is important because as shown above, the demand for buying homes is still there. This is proven even further when we look at the rise in new home sales, as opposed to existing declining sales.
This is also great news for home buyers. It means that the real estate market is nowhere near its peak. There is still a lot of potential room for growth. Buying a home now means that you can still benefit from high demand and rising home values.
Final Thoughts
Today’s data about home sales demonstrates that the real estate market is thriving. Home buyers and homeowners should feel great about the future. One thing that the data indicates is that homebuyers are under a lot of competition from other home buyers. This means you need every advantage possible in order to buy the home of your dreams. Working with an experienced realtor who understands your market inside-and-out can be the difference between buying your dream home and not. If you are interested in buying a home, contact us! If you are interested in taking advantage of today’s red hot real estate market and want to sell your home, contact us! The team at Streamline Realty is here to make your dream of buying a home or selling your home a reality.
