In July, homebuyer interest grew as the housing supply continued to thin out, with the West and Northeast regions leading recovery. The Realtor.com Housing Market Recovery Index grew by 2.1 points last week, bringing the index only 2.2 points away from pre-pandemic numbers. Housing demand remains strong but the overall improvement comes from the “pace of sales” component, according to Realtor.com. The Pace of Sales Index grew 7 points in the week ending July 4 to 92.9. Housing Demand Growth Index remains above recovery levels with 119.1 points.
The ‘housing demand’ component – which tracks growth in online search activity – remained visibly above recovery, with this week’s index reaching 119.1, down 0.4 points over the prior week. Despite posting a slight weekly decrease for the third week in a row, the demand index remains 19.1 points above the January baseline. The sustained, record-level homebuyer interest we’ve detected on realtor.com over the last five weeks is setting up a busy summer for housing. Homebuyer sentiment appears to have fully recovered too, as lower mortgage rates and easing job losses have boosted consumer confidence. With supply levels low, this backlog of demand portends increased competition and a shift toward a seller’s market.
Accordingly, the ‘home price’ component – which tracks growth in asking prices – remained the same as last week, at 102.6, 2.6 points above the January baseline. With supply at record lows and buyer competition on the rise, sellers have regained leverage, enabling the fastest price recorded this year. As more offers come through this summer, we’ll get a good indication of whether higher asking prices will translate into higher selling prices.