While a low inventory of available homes to buy had slowly been increasing over the past 10 months, things are tightening up again, thanks to low interest rates sparking more homebuyers into action.
According to realtor.com®’s July 2019 Monthly Housing Trend report, which tracks key trends across the market, including the national median home price, days on market and inventory, inventory growth was flat last month, which means it could start declining sooner than anticipated. Newly listed properties were down 7 percent from a year ago.
The national median home price in July was $315,000, up 5.5 percent from a year ago and a decrease from last year’s year-over-year growth of 8.7 percent. Additionally, July prices were down 0.2 percent from June, marking the earliest seasonal slowdown in home prices since 2012. The median number of days on market in July was 58, the same as a year ago.
The crux of the tensions lie in the entry-level segment of the housing market, say realtor.com® economists. While overall housing inventory had been growing, the number of homes in the entry-level segment declined, and challenges for entry-level and first-time buyers are mounting, including faster price growth ahead.
The inventory of properties priced below $200,000 in July decreased 9.9 percent year-over-year, while at the same time, the inventory of homes priced above $750,000 increased 6.6 percent. No surprise then that competition for entry-level homes is fierce—homes priced below $200,000 spent just 56 days on the market, compared to 81 days for those priced over $750,000.
Despite the sobering statistics for first-timers, millennials are forging ahead—the share of millennial mortgage originations increased to 46 percent from 43 percent last year, according to realtor.com®’s second quarter Generational Propensity report. The report found the median home purchased by millennials was priced at $248,000, up 5 percent year-over-year, a bigger increase than either Gen X or boomers had in home purchase price.
The report also found that while Gen X and boomers have increased their down payment percentages, millennials saw the average down payment slip to 8.2 percent from 8.9 percent a year ago. This increased the size of the typical millennial loan amount to $227,000 from $215,000. Lower mortgage rates are helping to cushion the impact of buying a higher-priced home and making additional debt more affordable. The monthly mortgage amount that millennials paid on a newly purchased home fell to $1,099 from $1,131 year-over-year.