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Home Prices Cool Off in the Summer

June existing home sales took a slight decrease according to Ten-X, an online real estate transaction marketplace. In its Residential Real Estate Nowcast, Ten-X predicted June sales to hit a seasonally adjusted rate (SAAR) between 5.28 and 5.64 million with a targeted number of 5.49 million. This is down 2.3 percent from the National Association of Realtor’s (NAR) reported May sales and 0.7 percent down from 2016.

"Pending home sales numbers, mortgage applications, and online search activity all suggest that the market for existing home sales may be cooling off slightly as we enter the summer months," said Ten-X Executive Vice President Rick Sharga. "It's possible that home purchases in the first half were accelerated by consumers trying to get deals done before interest rates increased. If that's the case, we may see existing home sales plateau for the balance of 2017."

It was predicted in the Tex-X Nowcast last month that home sales would remain near cycle highs, aligning with the recent NAR release, which showed a minor increase in sales from the month prior. It was also accurately predicted that another solid year-over-year gain in existing home prices would happen, which also was confirmed by NAR, as the median existing home price for all housing types rose 5.8 percent year-over-year to $252,800 in May. Now, the Tex-X Nowcast is predicting median existing home prices to continue to make annual strides falling between $244,194 and $269,899 with a target price point of $257,046, up 1.7 percent from May and 3.8 percent gain from last year.

"While sales keep edging up, historically low inventory levels continue to restrain the pace of growth,” Ten-X Chief Economist Peter Muoio said. “Meanwhile, intensifying competition between owner-occupants and increasingly active investors amid the low inventory situation, are generating substantial price increases. This price appreciation is beneficial for existing homeowners, but will continue to affect affordability. As long as the labor market remains strong and wages continue to increase, the housing market will remain on solid footing."

About Author: Brianna Gilpin

Brianna Gilpin, Online Editor for MReport and DS News, is a graduate of Texas A&M University where she received her B.A. in Telecommunication Media Studies. Gilpin previously worked at Hearst Media, one of the nation's leading diversified media and information services companies. To contact Gilpin, email brianna.gilpin@thefivestar.com.

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