Here’s the housing slowdown we’ve been expecting for months.
Home sales are slowing, and some of the hottest things in the pandemic era are “Zoom Town“—Sleepy areas where remote workers have pushed real estate prices — have already experienced price cuts.
Important reason: The idea of a real estate recession can seem scary, especially if you survive the last one.But at home prices Record highThis was a delayed market due to air conditioning.
what’s happening: “Activities in the housing sector are weakening,” Fed Chair Jerome Powell said Wednesday. Announced another 0.75 percentage point hike..
- The National Association of Real Estate Agents reported yesterday that home purchase contracts, or transactions that were signed but not yet closed, fell 8.6% in June from a month ago. This was well above what economists expected, down 20% from last year.
- It was also the slowest pace since September 2011, except for the first two months of the pandemic. Note CNBC..
- Mortgage applications, on the other hand, are the lowest level of activity since February 2000.
What’s next: Prices have fallen in some pockets, and analysts expect it to continue.
- According to survey data from housing market research firm Zonda, 20% of builders cut prices for new homes in July.
- “Some of the metropolitan areas that attracted out-of-state buyers early in the housing boom are cooling most rapidly,” he wrote. WSJ Nicole Friedman.. According to Redfin data she quotes, Boise, Denver, Salt Lake City, Tacoma and Washington all had the most price cuts in June.
What they are saying: “Activity is now in free fall, inventories are skyrocketing, and prices are starting to fall,” Pantheon Chief Economist Ian Shepherdson said in a memo. He has been calling this slowdown for some time.
- George Ratiu, Senior Economist and Economic Research Manager at Realtor.com, said:
Zoom out: This is how the real world reacts to what’s happening at the Fed. Mortgage rates soared and house prices suddenly fell further. People want to buy, but they can’t.
- The Fed can be said to have “crushed demand” for housing, except that people still really want a home. The United States is suffering from a long-term housing shortage.
“The challenge in the housing market is that many Americans are still eager to own a home,” Zonda’s chief economist Ali Wolf said in a message to Axios. “But rising house prices and rising interest rates have pushed them to the limit.”