For the first half of the year, the big story in real estate was the continued low inventory of homes for sale across the U.S. Each month brought another report of fewer homes for sale than the same month a year earlier.
Demand continued to outstrip supply for a third straight year during the first half of 2018, and the second half is likely to bring more of the same.
Lack of homes for sale meant fewer homes were sold overall. Strong demand drove prices higher in many areas. The National Association of Realtors this month, reporting June sales numbers, said sales of existing homes decreased for the third consecutive month. Meantime the median existing-home price marked a new high, rising 5.2 percent from the previous June, to $276,900.
The same trend has played out across many of Long & Foster’s local markets in the U.S. Mid-Atlantic and Northeast, as can be seen in Long & Foster’s June Market Minute Reports. For example, in Montgomery County, Maryland, units sold in June were down 9 percent compared to a year earlier while prices rose 8 percent. Sales declined 7 percent in Philadelphia County, Pennsylvania, with the number of available homes falling 24 percent and prices increasing 4 percent. Richmond, Virginia, saw 2 percent fewer homes sold, and nearby Goochland and Hanover counties experienced 20 percent drops.
“June was not the kind of month we normally would expect, but most would agree that’s the result of having inventory contraction every month for the past three years,” said Larry “Boomer” Foster, president of Long & Foster Real Estate, in news releases about June home sales.
Gary Scott, also president of Long & Foster Real Estate, said consumers can expect the second half of this year to look much like the first half. First-time and move-up buyers will continue to have difficulty finding homes because of high demand for too few properties for sale.
Foster added that builders find it more lucrative to build larger homes – not starter homes – because their margins are squeezed by rising labor and materials costs.
Scott said he sees strong sales continuing into the future, as Millennials form families and look to move up or buy their first homes. Economic fundamentals are expected to remain positive, and interest rates, though rising, should remain historically low.
The best way for buyers and sellers to navigate a challenging market is by working with an experienced Long & Foster Realtor who has the skills and training to advise on when to make a higher offer or walk away, or help them evaluate multiple offers when selling.
“There are many real estate agents that are sales people who aren’t committed, aren’t professionally trained and aren’t prepared,” Scott said. “They’re not real estate professionals, who are trusted advisors that build solid relationships. It’s not hard to be a real estate agent, but it’s really hard to be a good one.”