With all due respect to T.S. Eliot, July, not April, has been the cruelest month—at least when it comes to the post-recovery real estate business. More often than not, smack in the middle of the booming summer months we’ve found ourselves coming to grips with some kind of big-time glitch in the economy or consumer confidence (U.S. debt ceiling fight! Greek bankruptcy! U.S. government shutdown!), or mortgage rates that move up substantially.
But this July was different. There was no summer surprise—but there were a variety of factors favoring those looking to buy a home.
Take a look at these stats for July:
- Highest consumer confidence for a July since 2007
- Highest nominal home prices for a July in history
- Likely the lowest July unemployment figures since 2007 (we’ll know for sure on Friday)
- Lowest July mortgage rates ever
We had 1% more homes available for sale in July compared with June. That was likely the peak for the year for inventory. Meanwhile, we estimate demand by those looking to buy a home rose 8% in July from June.
Last year was the best since 2007 for home sales. In the first half of 2016, we’ve seen a 5% increase over the first half of 2015. Based on our view of real-time inventory and demand, July should see that growth continue.
What are the biggest changes we’re seeing in demand? We stay tuned to what consumers are experiencing through regular surveys of our users.
Millennials aged 25 to 34 continue to pick up momentum. They are already the largest buying cohort, but they’re just starting to flex their collective home-buying muscle. Last July, 75% of realtor.com®’s 25- to 34-year-old users were looking to buy a home. This July, that percentage increased to 81%.
We’re also seeing more buyers report they are getting overbid by other buyers. The biggest jump in the “I’m being over bid” quandary is being reported by 25- to 34-year-olds. Last July only 1.7% of 25- to 34-year-olds reported that being overbid was a buying impediment; this year, that figure climbed to 8%.
The downside to historically low mortgage rates is that it is tougher this summer to get approved for a mortgage than it was last year. Qualifying for a mortgage has become a bigger obstacle for first-time buyers. Last July, 5% of first-time buyers reported that qualifying for a mortgage was a significant hurdle. That figure rose to 9% this July.
Even repeat buyers are having more problems, particularly with the tight supply. Last July, 20% of repeat buyers reported that finding the right place was an impediment to buying a home. The share reporting “finding a home” as a problem rose to 25% this July.
The good news for would-be buyers who have struggled to find a home or have been outbid in prior attempts is that the balance of power shifts a bit more in your favor in late summer and fall.
This is the time of the year when sales slow down, but inventory is at its peak.
That means there are more homes for sale per buyer now, and yet mortgage rates remain close to their all-time lows. The window to enjoy the best summer in a decade for real estate remains open for the well-qualified and those ready to act.