Real Estate Market Update as of August 1, 2018

Inventory Sees First Increase Since 2015
A slight increase in the supply of homes for sale brought buyers back to the table in June. Pending home sales, a measure of signed contracts to buy existing homes, rose 0.9 percent in June compared to May, according to the National Association of Realtors. Sales, however, were 2.5 percent lower than they were in June 2017. Pending home sales have been down annually for six straight months “The positive forces of faster economic growth and steady hiring are being met by the negative forces of higher home prices and mortgage rates,” Lawrence Yun, NAR’s chief economist, said in a statement. “Even with slightly more homeowners putting their home on the market, inventory is still subpar and not meeting demand. As a result, affordability constraints are pricing out some would-be buyers and keeping overall sales activity below last year’s pace.”

Home Prices Resist Slowdown
To no surprise, home prices increased once again in May, and even showed double-digit gains in some markets on the West Coast, and increasing at two to three times the rate of inflation across the U.S., according to the latest report from S&P Dow Jones Indices and CoreLogic. Home prices increased 6.4% in May, the same annual increase that was seen the month before, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, which covers all nine census divisions. The 10-City Composite posed an annual increase of 6.1% in May, down from April’s increase of 6.4%, and the 20-City Composite increased by 6.5%, down from the increase of 6.7% the previous month.

Consumer Spending Rolls On
U.S. consumer spending increased solidly in June as households spent more on restaurants and accommodation, building a strong base for the economy heading into the third quarter, while inflation rose moderately. The Commerce Department said on Tuesday consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.4 percent last month. Data for May was revised up to show consumer spending advancing 0.5 percent instead of the previously reported 0.2 percent increase. Last month's increase in consumer spending was in line with economists' expectations. The data was included in last Friday's second-quarter gross domestic product report, which showed consumer spending accelerating at a 4.0 percent annualized rate during that period after a pedestrian 0.5 percent pace in the first quarter.

Courtesy of Sotheby's International Realty's in-house Lender Simon Atik, 310.880.8414, Simon.Atik@grarate.com, Vice President of Mortgage Lending, Guaranteed Rate Affinity.

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