We’re just a few weeks into summer and it’s tough to decide which is hotter: the record-breaking heat waves or the national housing market.
At a median of 17 days on the market, homes are selling at a record pace. Not only are they selling fast, over half are selling above asking price — another record.
Just like during a heat wave, there’s no shame in looking ahead to see when things will cool down.
Will the housing market cool off this summer?
For an idea of how the next three months could go, we looked to the latest National Association of REALTORS® (NAR) Confidence Index Survey, which gathers sentiments and data from REALTORS® based on their monthly transactions.
According to the Realtors surveyed, homebuyers should expect the housing market to stay at a steady boil this summer.
Twenty four percent of respondents expect sales volume in the next three months to increase nearly 1%-5% from last year’s level.
However, there’s a wide difference of opinion among some agents. Eleven percent of respondents expect sales volume to fall by more than 20% over the next three months. That’s the same share as those who expect a 6%-10% rise or an 11%-20% rise.
While sales volume predictions were somewhat varied, Realtors were pretty confident that home prices will continue to rise. Seventy-seven percent of respondents expect prices to continue to rise this summer. The largest share, 34%, expects prices will rise 1%-5% from last year’s level.
Buyer vs seller activity
More homeowners putting their houses for sale could increase inventory and, in turn, bring down competition and prices for homebuyers.
The NAR measures the amount of buyer and seller activity they see “on the ground” based on activity seen by agents. The agents report the amount of “traffic” they see in the daily course of business.
The three-month Seller Traffic Index barely budged from last month and last year. And responses were relatively even regarding seller traffic being weak (28%), stable (32%), or strong (32%) in the next three months. Taken together, there’s little expectation that seller traffic will increase enough to substantially impact inventory.
Meanwhile, 49% of realtors expect buyer traffic to increase in the next three months, putting more pressure on an already strained inventory.
Finding relief in a hot market
While demand isn’t going away, it seems to be shifting away from major housing markets. Realtors predict Alabama will have the greatest year-over-year sales change in the next three months at 6%-7%. Idaho, Nebraska, South Carolina, and Maryland fell into the next bracket with a 4%-6% expected sales change.
This suggests that homebuyers aren’t willing to wait for a hot market to cool down. Instead, they’re repositioning to more affordable areas and thereby keeping their foot on the demand pedal.