Home Sale Boom Finally Dropping

The housing boom that started because of the pandemic has been going strong for at least a year now. Finally, this summer, sales have started to decreasing, bringing costs down with them. According to the Census Bureau, newly built houses in June have sold at a lower rate, dropping 6.6% since the revised May rate. This is a huge 19.4% drop since last June 2020.

Median home prices have gained 6%, rather than the average 15-20% high gains last month. It is possible that this drop could be the first sign of inflated home prices correcting themselves over time. “The moderation in home sales is likely a combination of sticker shock and the slowdown in the ability of builders to finish homes because of a variety of delays” says Chief Investment Officer at the Bleakley Advisory Group, Peter Boockvar.

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If the market stays saturated, everyone who bought a home got one, then a decline in sales and prices will begin to gradually decline at this rate. It is also possible that this is just a lull that will be picked back up once again. Only time will tell to see if this first drop is the beginning of a trend.

It is also possible that the drop was influenced by the mortgage rates going up by a quarter percentage point, making homebuyers less interested in purchasing in the month of June. Michael Goodman of Sherwood Lumber previously told GOBankingRates that there was a prediction for the boom to last another year and a half still. It was reported by UCSB that homes for sale have increased in June from 5.5 available in May to 6.3-month supply.

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