As anyone looking to purchase a house in the U.S. will report, home prices are at unprecedented levels. Now, a new report confirms it, making some in the industry worry about who is being left behind in the competition to get a home.
"We have not seen an increase this strong in our history of the data set that does go back to the 1960s,” said Jessica Lautz, the Vice President of Demographics and Behavioral Insights for the National Association of Realtors.
She’s referencing the NAR’s latest report showing the median home price in May 2021 was a little over $350,000 in America - a 24% increase over May 2020. And while year-over-year comparisons should be taken with a grain of salt considering the coronavirus pandemic had shut down almost every industry a year ago, the median home price is the highest ever on record.
The pent-up demand is driving up prices as more people are entering the housing market at the same time. There is also a continuing dwindling inventory of available homes. The combined effect is a drop in month-to-month sales of homes, despite the demand.
The NAR’s monthly report showed inventory increased just 7% from April to May 2021, and is still down 21% from how many units were available a year ago.
Lautz says it’s an issue several years in the making.
"We have had more than a decade of under-building. We know that people didn't feel comfortable selling last year and so they stayed in their home,” Lautz said.
Competition is fierce: homes are selling in just 17 days, compared to 26 days on the market in May 2020.
"The really concerning part about this homebuyer market, is that we are leaving a lot of people behind. We see nearly a quarter of all transactions are all cash right now. Those are wealthy buyers,” Lautz said.
Lautz said first-time homebuyers are being left behind, and the numbers show this group of buyers are at a historic low making up only 31% of home sales in May 2021.
But, she says those dreaming of owning a home someday may find relief on the horizon. Lautz says those who were nervous about selling during the pandemic are beginning to list their properties, and construction is ramping up on new homes.