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The Week Ahead: The Supply-Demand Battle Rages Onward

July begins the start of the third quarter and with it, indications of what the rest of 2021 may bring in the housing industry.

This coming Tuesday, July 6, CoreLogic’s Home Price Index, highlighting May 2021 data, will be released.

Recent weeks have shown signs of inventory increasing as Realtor.com’s Monthly Housing Report for June 2021 reported new listings making a comeback. While the number of homes for sale remained much lower than normal with a 43.1% decline over last year, it marked a significant improvement over the previous month's 50.9% decline in May.

And while not a huge improvement, 415,000 fewer homes were available for sale on a typical day in June compared to the same time last year, it was a marked improvement over the more than 50% year-over-year declines seen in March, April, and May. While more sellers entered the market in June 2021 compared to June 2020, new listings growth was still 14.4% below the average of the June levels seen from 2017 to 2019.

As supply remains an issue, more eager buyers are competing for a smaller piece of the pie, thus driving prices upward as Realtor.com found home prices breaking records for a fifth consecutive month as the median sales price hit $385,000.

Despite median sales prices inching closer to the $400,000 mark nationwide, yet another trip for mortgage rates below the 3% mark may propel the market through the summer, as Freddie Mac reported the 30-year fixed-rate mortgage (FRM) dropping to 2.98% this week, down four basis points from 3.02% the previous week.

Conversely, both purchase apps and refi apps showed a decline over the past week, as the Mortgage Bankers Association (MBA) reported overall mortgage application volume sliding 6.9% lower than the previous week. Refis do remain strong with rates jumping above and below the 3% mark, but overall refi application volume activity decreased to 61.9% of total applications this past week, down from 62.5% the previous week.

"Purchase applications for conventional loans declined last week to the lowest level since last May,” said Mike Fratantoni, MBA's SVP and Chief Economist. “The average loan size for total purchase applications increased, indicating that first-time homebuyers, who typically get smaller loans, are likely getting squeezed out of the market due to the lack of entry-level homes for sale."

Click here for more on the trajectory of the market when CoreLogic’s May 2021 Home Price Index is released Tuesday.

Here's what else is happening in The Week Ahead:

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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