An uptick in homebuying activity in June after months of decline shows slowed buying activity resulted from low inventory, says the National Association of Realtors (NAR). June housing inventory was up 3.3% from May, bringing homebuying activity up with it. Builders continue to make strides in meeting housing demand, finds NAR. There were 1.6 million housing starts in June and nearly half of all metros the NAR tracks issued more single-family permits than its historical average. Houston and Dallas issued the most single-family permits during the last 12 months, exceeding 50,000 each. Phoenix issued the third highest number of permits at just over 36,000.
In the meantime, several federal aid programs will expire soon. The foreclosure moratorium, which prevents foreclosures of federally-backed mortgages, will expire at the end of July while the mortgage forbearance program, which allows borrowers to pause or reduce their payments, will also lapse at the end of September. Although the number of mortgages in forbearance continues to fall, there are still nearly 2 million homeowners in the forbearance program, according to Black Knight Financial Technology Solutions, LLC. Therefore, these homeowners will need to resume their mortgage payments very soon. Homeowners who are still facing financial hardships such that they cannot make their payments should have in mind that they have accumulated a substantial amount in equity that could save them from a foreclosure. For instance, in the last decade, the typical homeowner accumulated more than $120,000 in equity due to price appreciation. Thus, they could sell their home. But what does this mean for the real estate market? To put it simply, housing inventory may increase further in the following months with some of these homeowners selling their homes. It’s noteworthy to mention that most of the metro areas with the most single-family permits also had a higher forbearance rate than the national level (4%1). For example, the Dallas metro area issued about 51,100 single-family permits in the last 12 months while 10.3%2 of the active mortgages were in the forbearance program as of March 2021. Respectively, 8.1%3 of the mortgages were in the forbearance program in the Houston metro area. Thus, expect inventory to rise even further in these areas providing more opportunities to would-be homebuyers.
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