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Update from July 23, 2024
The national median price of existing homes in June rose to $426,900
Home sales in the United States decreased in June for the fourth consecutive month. The combination of high prices and high mortgage rates has made homeownership less attractive for renters and has discouraged homeowners from putting their homes on the market.
The low availability of homes for sale in much of the American market is driving prices up. The national median price of existing homes in June rose to $426,900, a record in data dating back to 1999 and a 4.1% increase from the previous year, the National Association of Realtors said on Tuesday.
Although the number of homes on the market has increased in recent months, it is still well below historical levels, which can lead to bidding wars for desirable properties. More than a third of home sales in June occurred at a price higher than the listing price.
Nationally, there were 1.32 million homes for sale or pending closing in America at the end of June, an increase of 3.1% from May and 23.4% from June 2023.
At the current sales pace, there is a supply of homes on the American market for 4.1 months, the highest level since May 2020.
Update from November 17, 2023
In October 2023, building permits for new residential housing in the United States amounted to 1,487,000 units, up from 1,471,000 units in September 2023. In October 2023, 1,372,000 housing projects were started in the American market compared to 1,346,000 projects the previous month.
The sale of existing homes recorded a 2.0% decline in September 2023, with a projection of sales for the entire 2023 amounting to 3.96 million homes and apartments in the United States. Compared to the previous year, sales showed a 15.4% decline. The average selling price of existing homes increased by 2.8% from the previous year, reaching $394,300, marking the third consecutive month of year-over-year increase. The inventory of unsold existing homes rose by 2.7% from the previous month, standing at 1.13 million homes at the end of September, equivalent to 3.4 months of supply at the current monthly sales rate for the American market.
The secondary housing market in America, where the owner puts their house up for sale, is slowing down due to high mortgage interest rates. Homeowners who took out mortgages when rates were 2.5% - 3.0% are hesitant to sell now because they would have to take out a mortgage at 7.5% to buy another house.
Sales of new single-family homes in the United States increased by 12.3% in September 2023, with a projection of sales for the entire 2023 amounting to 759,000 units, up from 676,000 units the previous month and exceeding market analysts' projections of 680,000 housing units. Sales of new homes in the USA reached their highest level since February 2022, due to a shortage of homes put up for sale by previous owners. The median price of new homes sold in America was $418,800, while the average selling price was $503,900, compared to $477,700 and $530,100 respectively a year ago. At the end of September, there were 435,000 homes for sale on the American market, equivalent to a 6.9-month supply at the current sales rate. [Source: U.S. Census Bureau] According to Freddie Mac, the 30-year mortgage rate averaged 7.57% in the second week of October 2023, up from the average rate of 7.49% the previous week and 6.92% a year earlier.
From the start of the pandemic until 2022, of the 4.1 million new residential homes built in the United States 29% were located in Florida and Texas, [source: US Census Bureau]. In both states, the percentage of homes not burdened by any mortgage exceeds 43%
The state with the highest share of owned homes [i.e., free of mortgages or liens, where owners have fully paid off the original mortgage they took out to buy the home] is West Virginia, with nearly 53%. The median price of a home in this state was $157,498 in October 2023, the lowest among all states, according to data provided by Zillow Group Inc.
In America, the percentage of fixed-rate mortgages is 96% In other words, only 4% of existing home mortgages are adjustable-rate. The implications in terms of monetary policy effectiveness are significant.
Original publication from May 18, 2022
In the United States, the homeownership rate is 64.8% [Source: US Census Bureau]. When it comes to the under-35 demographic, only a third of Americans own a home. Despite rising prices making it difficult for young Americans to buy a house in the USA, the older cohort of Gen Z (born between 1997 and 2012) has begun to apply for mortgages to become homeowners. During the last home-buying boom in America, Gen Z consumers accounted for 10% of homebuyers in the United States, and the locations chosen to live might surprise you as they differ from more traditional ones.
Gen Z members are heading to affordable mid-sized cities to buy their first home, particularly in the Midwest states. A recent study highlights that four of the top ten cities in the USA where Gen Z buys a home are located in the Midwest. Below are the metropolitan areas in the United States where Gen Z consumers choose to move and purchase a home [Source: LendingTree]:
According to the study by the online mortgage platform LendingTree, Gen Z consumers are moving away from coastal cities to invest in property purchases in smaller, more suburban metro areas in the United States. This will lead to greater purchasing power for consumer goods and food products, limited in cities like New York, Miami, or San Francisco by the high cost of living. This does not mean that businesses based in coastal US cities will stop working with Gen Z consumers: rather, there will be a growth of consumers aged 20 to 25 in the cities where they buy a home, with economic implications for those metro areas.
Older Gen Z Americans have entered the workforce, and with their savings and parental help, they are impacting the GDP and consumer spending in America. In particular, the shift of many Gen Z to the central US states due to home purchases could lead to significant growth in local economies. Research by Morgan Stanley paints a promising picture of the United States for the coming decades, supporting the hypothesis of a youth boom starting in the mid-2020s.
Ultimately, the growth in real estate purchases by Gen Z is helping the USA perform strongly in the global market. These demographic changes indeed lead to increased productivity of the American workforce, boosting consumption, increasing GDP growth rates, and expanding corporate profits in the United States.
Real estate investments by Generation Z will be a factor not to be underestimated by the end of this decade. By 2030, older American Gen Z will be 32-33 years old: if the US economy continues to recover, it is likely that this demographic will purchase a residential property before turning 35. This is in stark contrast to Millennials, who were held back by a period of recession and faced greater difficulties investing in real estate before age 35. The Bank of America predicts that Gen Z will be the most disruptive generation ever in terms of economic impact: companies in the USA will need to properly accommodate Gen Z to compete in the post-pandemic American market.
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