Sales of existing U.S. homes rose to the highest level in eight years, according to the National Association of Realtors, but that may be the peak for the year. One real estate brokerage claims consumer demand for housing took a sharp turn for the worse in June, as potential buyers balked at higher home prices.
"People look at houses and don't pull the trigger," said Glenn Kelman, CEO of brokerage Redfin, which released a new demand index on Thursday. "We know that the number of people writing offers has been declining for 4½ weeks, and based on that data we make a forecast."
The new demand index tracks millions of visits to Redfin's listing pages, as well as customer requests for home tours, customer offer requests on homes and various pricing data; in June it showed demand up 13 percent from a year ago but down 7 percent from May. That was the largest monthly decline since December of 2014.
"I think there's fatigue, frustration with high prices and a feeling that rates have started to move up, so people are packing it in early this season. Sometimes the housing market really has a long summer. I don't think it will this year," Kelman said.
The median price of a home sold in June rose to $236,400, the highest ever recorded by the Realtors association. Continued tight supply is leading to bidding wars in markets across the nation and decreased affordability. While mortgage rates are still historically low, they have been rising slightly since the start of May. Realtors' economists suggest the surge in June closings may have been in part due to some buyers jumping off the fence in May, fearing rates would go higher.
Redfin is predicting home prices will rise just 4.3 percent in July from last July, and 2.2 percent in August. It also predicts sales will increase just over 14 percent annually in July, but just 4.6 percent in August.
Today's housing market is increasingly driven by owner-occupant, mortgage-dependent buyers. Investors had fueled the market in 2013, pushing prices higher far faster than income growth. Investors are now a far smaller share. According to RealtyTrac, all-cash home sales fell to the lowest level since 2008 as buyers using low down payment FHA loans rose to the highest level in over two years.
"As the investor-driven housing recovery faded in the first half of 2015, first-time home buyers, boomerang buyers and other traditional owner-occupant buyers started to step into the gap and pick up the slack," said Daren Blomquist, vice president at RealtyTrac. "U.S. sellers so far in 2015 are realizing the biggest gains in home price appreciation since 2007. In June sellers sold for above estimated market value on average for the first time in nearly two years."
Tight supply has led to a quick turnaround for sellers, just 34 days; that is the shortest time recorded by the Realtors since the association began tracking the metric in 2011.
Economists at mortgage giants Fannie Mae and Freddie Mac put out reports Thursday suggesting continued improvement in the housing market, but noting lean inventories. Fall and winter are traditionally the slowest period in housing, but Redfin analysts say they accounted for seasonality in their new index. Anecdotally, real estate agents across the nation have reported a growing reluctance of buyers to stay in bidding wars and an increasing resistance to higher home prices.