The average American home listing price rose 5.5% to $315,000 in July, according to Realtor.com’s Housing Trend Report.
Although this rate is only 0.2% down from June, it’s a significant decrease from the 8.7% growth experienced during the same time period in 2018.
With an annual decline of 3.2%, July’s lackluster reading marks the earliest seasonal slowdown in home prices since 2012, according to the company.
“July’s data highlight tension in the housing markets between buyers eager to take advantage of lower mortgage rates and potential sellers concerned about slowing price growth,” said George Ratiu, realtor.com’s senior economist. “The decline in newly listed properties suggests that some would-be sellers are stepping back from the market, during the peak buying season, when most people are searching for their next home.”
While housing inventory is growing, the number of homes in the entry-level segment are declining, Ratiu said. Now that trends are shifting for the market as a whole, challenges for entry-level and first-time buyers are mounting, he said.
The inventory of properties priced below $200,000 in July fell 9.9% year-over-year, while, the inventory of homes priced above $750,000 increased 6.6%, according to realtor.com.
Competition for entry-level homes continues to be tight as homes priced below $200,000 only spent 56 days on the market, whereas properties priced over $750,000 spent a total of 81 days on the market, realtor.com said.
A recent report from John Burns Real Estate Consulting, indicates that only 54% of Americans can afford an entry level home that is priced at 20% of the median home price in their area.
Although this figure seems bleak, the report notes that affordability is improving as a recent drop in mortgage rates has spurred growth by 3%.
“The plunge in mortgage rates has created homeownership possibilities for 2.7 million more households as well as move-up possibilities for current homeowners with enough equity,” the analysts wrote. “This will spur home-buying activity this year, possibly averting the decline in volume we have been forecasting.”