According to the National Association of Realtors , home prices are nearly flat and housing inventories nationwide have gone above the benchmark six-month supply.
When there is more than six months supply of homes, the market is said to be a buyer's market. Inventories of less than six month's supply are said to be seller's market. A buyer's market favors the buyer in negotiating the sales price and terms with the seller.
June sales were 8.9 percent below last year's pace.
David Lereah, NAR's chief economist, said the housing market is flattening-out. "Over the last three months home sales have held in a narrow range, easing to a level that is near our annual projection, which tells us the market is stabilizing," he said. "At the same time, sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories. Home prices are only a little higher than a year ago."
The national median existing-home price for all housing types was $231,000 in June, up 0.9 percent from June 2005 when the median was $229,000. The median is a typical market price where half of the homes sold for more and half sold for less.
"The change in price performance is directly tied to housing inventories -- a year ago we had a lean supply of homes and a sellers' market, with monthly home sales at an all-time record high," Lereah said.
Total housing inventory levels rose 3.8 percent at the end of June to 3.73 million existing homes available for sale, which represents a 6.8-month supply at the current sales pace. By contrast, in June 2005, there was a tight 4.4-month supply on the market.
In key markets such as California, where one out of nine homeowners lives, the market is still showing some appreciation, but far from the double digit returns of last year. According to the California Association of Realtors' chief economist, Leslie Appleton-Young, the median price of an existing home in California increased 6.2 percent in June and sales decreased 26.3 percent compared with the same period a year ago.
"Mortgage interest rates continued to edge up for the fifth consecutive month in June, contributing in part to a slowdown in sales," said Appleton-Young. "June 2006 was the first time since late 2001 that the sales pace fell below 500,000 for two consecutive months. Home sales declined 26.3 percent last month compared with June 2005, when they hit the third-highest monthly pace on record."
That puts California's unsold inventory for existing single-family detached homes at a 6.2 month supply, compared with 2.5 months (revised) for the same period a year ago.
High prices haven't been the only factor to cool the housing market. Mortgage interest rates have also risen over a point from June 2005 to June 2006, further depressing affordability for homebuyers.
The good news is for homebuyers, says NAR President Thomas M. Stevens. "People who were discouraged by the bidding wars that were so common over the last few years are finding more choices now," said Stevens, senior vice president of NRT Inc. "Relative to the five-year housing boom, this year is a buyer's market in much of the country with plentiful supply, along with interest rates which remain historically favorable, so it's a good time to buy a home."
