Many Americans mistakenly believe that owning a home is beyond their means. Both homeowners and renters have the misconception that buyers need a down payment of at least 20 percent before they can qualify for a mortgage and purchase a home. But this is a home-buying myth, according to William E. Brown, president of the National Association of Realtors (NAR), who said, "Every month this year, roughly 60 percent of buyers who financed their purchase with a mortgage made a down payment that was 6 percent or less." Buyers with steady jobs and reasonable debt loads can find mortgage options that suit their current level of savings.
Homes Selling Quickly
Those who qualify for a mortgage may have a difficult time finding a property to purchase, though. In July, an average property remained on the market for 30 days; this is two days longer than June's pace but an impressive six days shorter than July 2016. Of all the homes on the market in July, 51 percent of them sold in less than one month. What's more, for the past four months the average listing went under contract in under a month. According to Lawrence Yun, chief economist for NAR, "This speaks to the significant pent-up demand for buying rather than any perceived loss of interest." Demand will continue to outstrip supply in the coming months, due in large part to the lack of action on the new-home construction front.
The lack of supply will lead to more competition in the market this fall. This is not welcome news to first-time buyers; this group accounted for 33 percent of all housing market activity in July. This is up 1 percent from both a month ago and a year ago. For all of 2016, first-time buyers represented 35 percent of the market.
Some Gains, Some Losses
Although the demand for homes is high among first-time and veteran buyers alike, the lack of inventory is putting pressure on the sales pace. Existing-home sales increased in the South and West in July, but these gains were tempered by drops in the Northeast and Midwest. Overall, home sales fell 1.3 percent to a seasonally adjusted annual rate of 5.44 million, the lowest rate of the year to date; however, the sales pace is still 2.1 percent higher than July 2016.
Northeast - Existing-home sales annual rate of 650,000; a decrease of 14.5 percent from June 2017 and 1.5 percent from July 2016.
Midwest - Existing-home sales annual rate of 1.25 million; a decrease of 5.3 percent from June 2017 and 1.6 percent from July 2016.
South - Existing-home sales annual rate of 2.28 million; an increase of 2.2 percent from June 2017 and 3.6 percent from July 2016.
West - Existing-home sales annual rate of 1.26 million; an increase of 5 percent from June 2017 and July 2016.