About 708,000 homes sold throughout the month of July, a 1% increase from the previous month, "driven by double-digit gains in the West," according to George Ratiu, Realtor.com manager of Economic Research.
Ratiu noted, however, that homebuyers are in the market for existing homes rather than doling out funds to build a new home, which had been a common trend over the pandemic.
Over the past year potential home buyers sought new homes "due to a historically-low inventory of existing homes and shifting preferences for larger homes, backyards and suburban neighborhoods." Now, they're seeking a more affordable option, especially as prices of new homes remain elevated due to lumber costs.
In May, lumber costs "pushed the price tag of new homes to a record high of nearly $400,000," Ratiu said. As a result, new construction became out of budget for many buyers.
"Even with the cost of lumber coming down in June, builders maintained higher prices, pushing the median new home price to a record of $390,500," Ratiu said, adding that this is an 18.4% increase from the same time last year.
On top of that, homeowners "took advantage of market conditions and brought more existing homes to market this summer." This effectively broadened the options for potential homebuyers, according to Ratiu.
"With real estate markets moving toward more balance, we can expect buyers to continue seeking affordability," he said.
Over the next six months, buyers can continue to expect more inventory coupled with less competition, especially as we move into the fall and winter seasons.