Realtor.com’s Monthly Housing Report for July 2021 found that growth in the U.S. median listing price continued to moderate last month, but data shows some of this trend can be attributed to the increase in lower-priced homes for sale. The July Report was finally some good news for first-time buyers who have been forced out of the market due to affordability and supply issues, as new listings grew on a yearly basis for the fourth month in a row, as sellers added a higher number of smaller homes to the market.
Nationally, the number of homes for sale declined 33.5% year-over-year in July 2021. While inventory is still lower compared to last year, the rate of decline is improving, especially at more affordable price points.
The median list price held steady in July at last month's record-high of $385,000, up 10.3% year-over-year. However, prices are slightly moderating from the June growth rate of +12.7%, as more affordable homes were being listed this July compared to last year. Looking at trends for a benchmark, 2,000-square-foot, single-family home, we see that price growth in July continued at a brisk pace, with prices up 18.6% year-over-year.
The largest U.S. metros saw the third straight month of single-digit listing price growth in July, at an increase of 3.9% over last year. Additionally, 22 of the 50 biggest markets saw lower median listing prices in July compared to last year, but this can be attributed to an increase in smaller, more affordable inventory. Regionally, the West posted the biggest yearly price gain (+9.7%), with the highest big metro increases seen in Austin, Texas (+36.6%); Las Vegas (+20.6%); and Riverside, California (+20.0%).
"July housing trends show a market still working its way back toward some version of normal. The feverish pace of home sales is beginning to follow historical seasonal patterns, while new listings grew at an unusually high rate for the summer months, further helping the inventory crunch," said Realtor.com Chief Economist Danielle Hale. "This is shifting the housing market balance in a more buyer-friendly direction, but buyers may not see as much price moderation as suggested by the national trend because it's partly attributed to a shift toward smaller homes for sale. Still, if these changing inventory dynamics continue, we could see a wave of real estate activity heading into the latter part of the year."
Regardless of the size of the home, mortgage rates remain at historic lows, as last week, Freddie Mac reported the 30-year fixed-rate mortgage (FRM) averaging 2.77% for the week ending August 5, 2021, down from the previous week when it averaged 2.80%.
Although new listings growth is still below typical 2017-2019 levels (-9.5%), more new sellers entered the market in July (+6.5% year-over-year), which was higher than June's 5.5% increase year-over-year. Newly listed homes typically decline in the summer months from June to July, but this year, they held steady at -0.6% over June.
These newly listed homes were smaller in size than last year, which has shifted the mix of available inventory. Looking at the single-family home category alone, the share of homes having between 750- and 1,750-square feet increased from 30.2% in July 2020 to 36.3% in July 2021, while the inventory of homes having between 3,000- and 6,000-square feet decreased from 24.2% to 20.1%.
New listings grew 11.1% year-over-year in the nation's 50 largest metros, with more than half posting double-digit gains, led by Columbus, Ohio (+42.9%); Baltimore (+36.9%); Cleveland, Ohio (+35.8%); Milwaukee, Wis. (+34.3%); and Richmond, Va. (+30.1%). The biggest regional new listings increases were in the Midwest, up 19.8%, and in the West, up 11.3%.
In terms of speed of sale, homes spent just 38 days on the market in July, 22 days faster than last year, and 23 days faster than the 2017-2019 July average (a more normal pre-Covid housing market). In a sign of a return to typical seasonality, however, this was one day slower than the record 37-day time on market in June 2021. Four metros tied for the fastest time on market in July, at a median 17 days: Columbus, Ohio; Denver; Nashville; and Rochester, New York.