Home prices continue to rise across the country, making some people wonder if the housing market's ever-growing bubble isn't really a bubble after all. Both existing and new home sales are on the rise again, despite a springtime lull.
With the housing market on a nearly two-year hot streak, when can buyers expect things to cool down? More importantly, what's the outlook for lower-income and first-time homebuyers who can't afford an offer price auction?
Data shows existing home sales were up in July
According to the National Association of Realtors, sales for existing homes were up two percent month-over-month in Jul. 2021, and 1.5 percent year-over-year. No U.S. regions saw a decline.
Perhaps more importantly for lower-income and first-time homebuyers, the median sales price for existing homes rose 17.8 percent year-over-year in Jul. 2021. While the pandemic launched the housing market (existing and new homes alike) into red-hot territory, many experts suggest that trouble was brewing even before COVID-19 came around.
New single-family home sales are also up
Existing homes aren't the only ones experiencing a high turnover. Census data tells us that in Jul. 2021, 708,00 new single-family constructions sold in the U.S. This was nearly a 0.9 percent boost from the month prior but was lower than the 993,000 sold in Jan. 2021. Still, upward fluctuations suggest the new construction housing market isn't done with us yet.
The bright side: Unsold supply in the housing market is rising
The reason that experts say the housing market is not in a bubble is that the surge in sale numbers and prices is due to the simple issue of supply versus demand. The latest data says that the unsold supply of existing homes has risen 7.3 percent month-over-month to 1.3 million units. That puts supply 2.6 months ahead of demand for the sector.
In Apr. 2021, the demand for homes was 3.8 million above the available supply. This is a sign that the housing market could be headed toward a cooling-off period in the near future.
Efforts to balance the housing market continue—here's what experts say
In Jun. 2021, Blackstone bought out a rent-to-own business called Home Partners of America for $6 billion. With the purchase, Blackstone put 17,000 single-family units across the U.S. under their umbrella.
However, it may not be institutions that mark the housing market shift, but buyers themselves. Due to buyer fatigue, "sellers are responding to lower buyer enthusiasm with price reductions," Los Angeles real estate agent Tamar Asken told reporters. We're not there yet, but with reduced risk in buyer behavior (or more specifically, fewer people surpassing important inspections just to snag a contract), the fall season could bring lower temperatures as well as cooler real estate activity across the U.S.—just don't expect a swift and gutting housing crash like 2008's.