The American housing market belongs to the sellers, without question. Figures released Tuesday show the supply of homes for sale stateside is low, demand is high, and now prices are heating up even more.
But sellers today see more reasons to stay put than to profit.
Home prices jumped 7.1% annually in May, according to a new report from CoreLogic -- the biggest jump in four years. Annual price gains had been shrinking slightly, as mortgage rates rose, but apparently higher rates are not hurting demand. They are, however, exacerbating the already critical supply shortage.
If mortgage rates were to rise further, fewer homeowners would want to move. In fact, if today’s homeowners just considering a move were faced with a mortgage rate one percentage point higher than their current one, 24% would not move, according to a survey by John Burns Real Estate Consulting. What's more, 36% said they "may not" move. The average rate on the 30-year fixed is now slightly more than one percentage point higher than the lows following the recession.
The median price of an existing home sold in May was $264,800, according to the National Association of Realtors (NAR). Of course, all real estate is local, and certain markets are hotter than others. Seattle, Denver, and San Francisco continue to see some of the biggest price gains, as they also have the leanest supply.
NAR also says the supply of homes for sale has been dropping on an annual basis for the past 36 months. The shortage is most acute at the lower end of the market, where demand is highest and where investors bought thousands of distressed properties during the housing crash, turning them into lucrative rentals.
