"The market, right now, is a veritable case study of the law of supply and demand," according to a recent report from real estate data provider Altos Research. "Right now, there's a whole lot of supply, but very, very little demand. The buyers that drove a flurry of activity during the spring have left a deafening silence in their wake."
According to its 10-city composite index, there were 311,742 houses in inventory in July, up 2.2 percent from the previous month and up 3.8 percent over the last three. It seems that people who are shopping for a home just aren't buying fast enough to deplete inventory at the rate in which sellers are putting homes on the market.
Thomas Meyer, CEO of J.I. Kislak Mortgage, believes that the housing market right now is bumping along the bottom with bargain hunters and "traditional buyers" such as new families, and move-up buyers needing a bigger house.
"High unemployment has certainly had a dampening effect, but that runs up against the psychological orientation that now is the time to get a deal, [given] low housing prices coupled with low interest rates," he told HousingWatch. "Unfortunately, many shoppers are running into the very restrictive and conservative underwriting orientation today and can't qualify for a mortgage loan."
Pending home sales have been edging downward with near-term sales expected to be notably lower in contrast to the spring surge, when buyers rushed to take advantage of the homebuyer tax credit, according to the Pending Home Sales Index released in August by the National Association of Realtors.
Some real estate agents, however, think that the summer drop-off is part of the typical seasonal change of the market. "Some of the [decline in demand] is driven by the fact that we are closer to Labor Day," says John Butler, a Keller Williams agent in Minneapolis. "People are on vacation or getting kids ready for school. It is not uncommon to have a little bit of activity slow-down this time of year. Historically, there has always been a little bit of pickup in the fall. In the winter, obviously, activity slows," he says.
Everyone recognizes, however, that it is still a great time to buy if you can get the financing. On a national average, 30-year fixed-rate loans are still under 5 percent, according to the Mortgage Bankers Association. And the national median existing single-family price was $176,900 in the second quarter, up only 1.5 percent from $174,200 in the same period of 2009, reports the NAR.
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