Published August 11, 2021
The Surprising Reason Why Home Price Growth Is Slowing Down
Sometimes numbers can be deceiving.
On one hand, the wild home price growth seen during the COVID-19 pandemic has been steadily slowing nationally, signaling that the market is starting to cool. However, this is likely because there are more smaller homes on the market and fewer larger, more expensive ones, according to a recent Realtor.com® report.
It’s not that price growth is softening overall; it’s that the mix of homes for sale has shifted. Smaller residences typically cost less than larger ones, which are popular with pandemic-weary buyers seeking extra space for home offices and virtual classrooms.
And in a cruel twist for first-time buyers, prices are shooting up at a breakneck pace for starter homes, those that typically clock in between 750 and 1,750 square feet. Prices surged 18.6% for homes under 2,000 square feet in July. Budget-conscious buyers just haven’t been able to catch a break.
“Different types of homes are selling now,” says Realtor.com Chief Economist Danielle Hale. “We’re seeing more smaller, more affordable types of homes going on the market.”
Nationally, the median list price was $385,000 for homes of all sizes, an increase of 10.3% from the same month a year ago. But while the median list price was the same in June, the year-over-year increase then was 12.7%.
Homes are still selling briskly as well, at a median 38 days on the market. That’s 22 days faster than a year earlier.
There are also more homes coming on the market. Inventory rose 6.5% annually in July. Even more homes went up for sale in the nation’s largest metropolitan areas, particularly in the Midwest, which saw a nearly 20% increase in homes being listed.
However, while seeing more homes going up for sale is a good sign for this white-hot market, the overall number of properties bearing “For Sale” signs was down 33.5% year over year in July. Still, seeing more properties hit the market is encouraging, says Hale.
“These are baby steps in the right direction,” says Hale. “[But] we’re so far out of balance, it’s going to take a while before it’s noticeable for buyers.”
Contact The McLeod Group Network at 971.208.5093 or admin@mgnrealtors.com for ALL your Real Estate needs!
By: Realtor.com, Clare Trapasso
