A recent survey from Fannie Mae suggests that huge homebuyers are dissatisfied with the state of the residential real estate market. Are things cooling down or are buyers simply being priced out of the market?
According to Fannie Mae’s most recent Home Purchase Sentiment Index, pessimism among homebuyer’s was up in July. Only 28% of survey respondents reported positive feelings about the state of the market in July down from 32% the previous month. Furthermore, 66% of respondents said that it was a bad time to purchase a home, up from 64% the previous month.
The biggest reason for the pessimism is the continued low inventory and corresponding increase in prices. This is improving somewhat. The number of active listings has increased steadily from April through July, according to Realtor.com. The Realtor data also shows that while still at record highs, the median listing price has leveled off in recent months.
Nevertheless, home-prices are still incredibly high, making it too expensive for many homebuyers to stay in the market.
Locally, the number of closed sales are down. According to data from St. Louis Realtors, there were 2,175 homes sold in the region in July, down from 2,376 in June. This is to be expected, given that the market does tend to slow down a bit going into the Fall season. Significantly, the number of home sales is also down 4.8% year over year. This is the first month in the last twelve months where year over year sales were down, a sign that the market may be slowing down more broadly.
Inventory is also up slightly, although it still far from pre-COVID levels. Inventory has risen steadily over the last few months, even as the rate of sales increased. As of July, there were 2,925 homes available for sale. The month’s supply of inventory is also up to 1.6.
All this suggests that things are slowly cooling down. It should be noted, however, that the median home price both locally and across the country is still rising, albeit not quite as dramatically as earlier in the year. A cynical reading of these data is not a return to normal, but the advent of a new, much pricier normal, where many buyers are forced to exit the market.