This has come as a surprise to many analysts, with many expecting the market to remain steady or even increase. According to the National Association of Realtors, existing home sales dropped 4.4 percent in April and now stand at the lowest point since 2015. The chief economist for the association attributed this decrease to a shortage in the available inventory, which is causing prices to rise significantly faster than wages.
Despite the overall decline in sales, there is some positive news for first time buyers. According to the NAR, first-time buyer sales rose by 2 percent year-over-year, making up 32 percent of all existing home sales. The lack of available homes has caused the median price for homes to rise 6.6 percent compared to the same time last year. This presents an obstacle for first-time buyers, who are often already stretched financially due to student loans or other debts.
The tight supply is not expected to improve anytime soon, as builders remain focused on higher priced homes rather than entry-level homes. Without an increase in supply, prices are likely to continue to rise. This could further restrict first-time home buyers, unless wages increase at a higher rate than home prices.
The housing market’s recent five-year low in home sales is a cause of concern for many analysts, as it suggests that the market may not be as strong as previously thought. Despite the overall decrease in sales, first-time buyers are still actively purchasing homes, although they face an uphill battle due to high prices and a lack of entry-level homes. Unless builders increase the availability of more affordable homes, or wages rise to match prices, first-time buyers may find themselves unable to purchase in the current market.
This article was contributed on Nov 03, 2023
