The bright red housing market has begun to cool this spring after nearly two years of soaring prices and declining inventories.
Important reason: Homebuyers and lessors who are struggling to find an affordable place to live will have even a little more choice and less bidding war.
what’s happening: Zillow reports that the supply of homes for sale has only increased after being depleted in the last year and a half.
- According to Zillow, US sales were 740,000 at the end of April, up from 715,833 at the end of March. This is about half of the pre-pandemic level in April 2019.
- It’s not just the seasonal rise. According to Zillow, inventories have risen enough to close the gap with available homes in 2021 and should exceed last year’s inventories in late 2022.
Should help more sellers slow down The enthusiastic pace of the US market where median homes were robbed in just six days in April.
- Jeff Tucker, senior economist at real estate website Zillow, told Axios that this extraordinary sales rate is “extraordinary. It’s not what we’ve seen in the national housing market so far.” I’m talking.
New housing construction We also strengthened housing supply, To tell Lawrence Yun, Chief Economist of the National Association of Real Estate Agents.
- Still, persistent inflation and external factors like the Ukrainian war will continue to create tensions for potential buyers, he said.
Big picture: The dynamics of the housing market are changing in many ways, with rising mortgage rates being the first factor in a long time.
- Median mortgage payments rose to $ 408,458, reaching a record $ 2,404 at current 5.27% mortgage rates. Per Redfin..
- This is 42% higher than the monthly payment of $ 1,688 a year ago, when the mortgage rate was 2.96%...
- “Homebuyers continue to be squeezed in almost every way possible, so some companies are one step back from the market,” said Darryl Fairweather, Chief Economist at Redfin. Blog post..
Line spacing: As inventory increases, prices soften. Redfin reports that 15% of homeowners have reduced their asking prices Last month — up from 9% a year ago.
- “Despite the more common price cuts, most homes are still above the asking price and selling at record speeds,” said Fairweather.
Be wise: Cooldowns aren’t a sign of a home collapse — they’re just showing a return to a more balanced market, says Zillow’s Tucker.
- And while prices aren’t expected to start falling rapidly, at least they won’t rise that fast anymore.
Notable points: In some overheated markets such as Charlotte, North Carolina and Phoenix, prices could be revised during the next year, said Mark Zandi, chief economist at Moody’s Analytics. luck..
Conclusion: According to Tucker, it will probably take a year or two for housing supply and demand to return to equilibrium.