For the past year or so low interest rates whipped buyers into a frenzy. Although most stats are still strong in the seller’s favor, July saw a pullback in home prices nearly $30k less than the prior month.
Summer is normally a busy listing season. While listings were back up to a solid total of 593 for the month, July’s new listings still fell short of the last few summers. Both during the pandemic in 2020 and pre-Corona in 2019, new listings in July were still higher.
In addition, the amount of total listings is down significantly. Only 1,553 Staten Island properties were up for sale in July. And since this includes pending sales, the true number of available homes is even lower than that. In July of 2020, Staten Island sellers listed 945 new properties, and a total of 2,432 active inventory. Staten Island has 36% fewer homes available than last year, when the average home sold for $587,336.
Now comes the interesting part. Even with this supply shortage, prices nonetheless came down last month. In July the average home sold for $655,685. The prior month of June set a record high average sale price of $682,009. At 4%, this is the sharpest monthly decline since the height of the coronavirus pandemic in May 2020.
However, homes are still selling faster than they have in years. On average, Staten Island homes took just 76 days to sell (about 2.5 months). Last year in July of 2020, days on the market averaged 113 (nearly 4 months). Monthly sales were up to 465 in July, an amazing increase of 87.5% since last July 2020’s abysmal 248.
What we’re seeing now likely foreshadows the beginnings of a slowdown driven by home affordability. The key word is “foreshadows”. Tight housing supply will keep demand strong for the time being, evidenced by how quickly these houses move. We’re still in a seller’s market, but the question remains: for how long? A price drop of $26,324 over one month is noteworthy.
There have been rumors of an impending crash in 2022, when the Federal Reserve may begin to raise prime rates from their rock-bottom lows. The current 30-year mortgage rate sits at just 2.8%, making a home purchase very attractive to buyers trying to lock in the low rate. If rates went up just 1%, monthly payments would go up significantly.
We are still a ways away from a crash simply because of labor and supply shortages, some of the same issues plaguing the car industry. New construction is nowhere near the pre-pandemic building levels. Only when the inventory catches up to meet waning demand will prices start to fall more noticeably.