A steady increase in listings is guiding home sales to a six-month high as the figure rose 1.1% year over year in July, according to a Marcus & Millichap analysis.
Added options for prospective buyers have put downward pressure on home prices, with medians inching up only 0.3% over the past year, the smallest margin since late 2023. Recent downward movement in mortgage rates to 6.58% on a 30-year fixed mortgage from 6.96% earlier this year may encourage more sales, according to Marcus & Millichap.
The new home market is showing clearer signs of softening with greater downward pricing pressure. Although the number of new single-family houses for sale in July reached a 20-year high, the actual number of purchases has been falling on an annual basis since the end of 2024, according to the report. This led to a 6.2% annual decrease in the median sale price to below $400,000 for the first time since September 2021.
Marcus & Millichap noted this trend could be a positive for some potential buyers, as the greatest housing shortage across the country is in the middle-income range.
The challenging single-family housing market continues to bolster the rental landscape. Multifamily posted the best second quarter for apartment net absorption since at least 1993, according to the report. The national vacancy rate fell to 4.3% in June, well under the long-term average of 5.4%. However, vacancy remains above the low levels posted in 2021 and 2022.
All tiers and most major markets experienced vacancy declines even amid elevated supply pressure. The strong surge in tenant demand is already translating into some upward rent momentum, as the average U.S. effective rate rose 2.1% year-over-year in June, the widest margin since the same time in 2023.
A Moody’s estimate found the country is about two million homes short of demand. More than half of that total is from ‘pent-up households’ – those who would move out on their own if their budget allowed it. The largest housing deficit in both ownership and rental options is most acute in the Southeast and parts of the Southwest and Midwest. These trends bode well for multifamily.
“The acute shortfall of residential options across numerous communities in the U.S. helps explain the multifamily sector’s robust performance despite recent elevated supply pressure,” said the report. “As the number of single-family permits being pulled continues to decline, the onus for new supply shifts even further to the multifamily sector.”
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