U.S. Real Estate Overview
Note: August 2021 data below are the most recent released by the National Association of Realtors.
Existing-home sales retreated in August, breaking two straight months of increases, according to the National Association of Realtors®. Each of the four major U.S. regions experienced declines on both a month-over-month and a year-over-year perspective.
Total existing-home sales (transactions that include single-family homes, townhomes, condominiums and co-ops) fell 2.0% from July to a seasonally adjusted annual rate of 5.88 million in August. Year-over-year, sales dropped 1.5% from a year ago (5.97 million in August 2020).
"Sales slipped a bit in August as prices rose nationwide," said Lawrence Yun, NAR's chief economist. "Although there was a decline in home purchases, potential buyers are out and about searching, but much more measured about their financial limits, and simply waiting for more inventory."
The median existing-home price for all housing types in August was $356,700, up 14.9% from August 2020 ($310,400), as prices increased in each region. This marks 114 straight months of year-over-year gains.
"High home prices make for an unbalanced market, but prices would normalize with more supply," Yun said.
Properties typically remained on the market for 17 days in August, unchanged from July and down from 22 days in August 2020. Eighty-seven percent of homes sold in August 2021 were on the market for less than a month.
First-time buyers were responsible for 29% of sales in August, down from 30% in July and 33% in August 2020. NAR's 2020 Profile of Home Buyers and Sellers revealed that the annual share of first-time buyers was 31%.
"Securing a home is still a major challenge for many prospective buyers," said Yun. "A number of potential buyers have merely paused their search, but their desire and need for a home remain."
Moreover, a recent study from NAR found that student loan debt is preventing the majority of non-owner millennials and those making over $100,000 from buying a home.
Individual investors or second-home buyers, who account for many cash sales, purchased 15% of homes in August, even with July but up from 14% in August 2020. All-cash sales accounted for 22% of transactions in August, down from 23% in July and up from 18% in August 2020.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 2.84% in August, down from 2.87% in July. The average commitment rate across all of 2020 was 3.11%.
Investing in Real Estate
Investing in real estate has unique advantages over other types of investments. Let's take a look at some of the reasons why real estate investment should be on the "short list" for many investors:
- Interest in mortgage loans are tax-deductible. Investors can lower their tax liability while increasing their equity.
- Renters pay down your mortgage loan. Investors reap the benefits of rental income, which offsets your mortgage cost and build equity.
- Real Estate values increase over the long term. Real Estate is limited and will always be in demand.
- 1031 exchanges are available to defer taxable income when you are ready to sell.
Many investors are taking advantage of these great market conditions. Have questions? Give us a call. We are happy to help!
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