Evaluation of the U.S. Existing Home Market

 

The bar plots above illustrate the annual and monthly percentage changes in various metrics for the U.S. existing home market.

Evaluation of the U.S. Existing Home Market

1. Sales Trends:

   • There is a notable decline in both existing home sales and existing single-family home sales on an annual and monthly basis, indicating reduced buyer activity in the market. This trend could be due to high mortgage rates, which are making home purchases more expensive and less attractive to potential buyers.

2. Inventory and Supply:

   • The housing inventory for both existing homes and single-family homes has increased significantly, with an annual rise of over 20%. The months' supply, which measures the inventory relative to the current sales pace, has also risen sharply. This increase in supply suggests that homes are staying on the market longer, potentially leading to increased competition among sellers and downward pressure on prices.

3. Price Dynamics:

   • Despite the declining sales and increasing inventory, the median sales prices for both existing homes and single-family homes have risen. This increase may reflect a concentration of sales in higher-priced homes or a lag in price adjustments despite changing market conditions. However, if the inventory continues to grow and sales remain sluggish, price growth may slow or even reverse as sellers adjust to market realities.

Conclusion:

The U.S. existing home market shows signs of cooling, with declining sales, increasing inventory, and rising prices. The current market conditions suggest a potential shift towards a buyer's market, where increased supply may put pressure on sellers to lower prices. High mortgage rates and affordability challenges are likely contributing to the decrease in sales, and these factors will continue to shape the market's trajectory in the near term. Buyers may find more opportunities as inventory grows, while sellers might need to adjust expectations in a less competitive market