Home News This is the second-biggest home price correction of the post-WWII era—it’s also a fairly mild correction, so far

This is the second-biggest home price correction of the post-WWII era—it’s also a fairly mild correction, so far

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On Tuesday, U.S. house prices fell to Seasonally Adjusted Case-Shiller National Home Price Index It was the fifth straight month of decline in November. U.S. house prices are down 2.5% since peaking in June.

On the one hand, it’s worth noting that US house prices fell by 2.5%. Second Largest Adjustment in Home Prices in the Post-World War II EraBy November, on the other hand, it was only a modest correction compared to the 26% peak-to-trough drop recorded between 2007 and 2012.

what you’re driving Housing adjustments in progressWhat does it boil down to luck call “Pressurized” Affordability: a jump in of 3 percentage points from last year mortgage interest rate Combined with the 41% rise in U.S. home prices between March 2020 and June 2022, home ownership has become out of reach for too many buyers.sign falling housing prices.

There is also another factor. This time, both buyers and sellers know that prices are likely to fall.

“I think the religion people had from 1946 to 2008 that house prices were always going up is dead. My parents believed it was literally unthinkable. [home] Prices will go down.” Redfin CEO Glenn Kelman said: luck last yearBut that so-called house-price “religion” collapsed with the 2008 crash, Kelman says. “So people react [now] in addition [correction] With most PTSD, they recede much faster.

Let’s take a closer look at the latest Case-Shiller data.

124 consecutive months from the bottom of the previous adjustment in February 2012 to the high of 2012 pandemic housing boom June 2022, Seasonally Adjusted Case-Shiller National House Price Index reported positive month-over-month growth in house prices. It has been superseded by this new streak. US house prices fell for the fifth month in a row.

That said, this ongoing housing adjustment is not a panacea.In particular, it Overheating of housing markets in Europe and the United States Like San Francisco (down 11.9% from peak in 2022), Seattle (down 13.5%), phoenix (down 7.7%), and Las Vegas (7%).

On the other hand, the market disconnected from fundamentals during the pandemic housing boom, including New York (down 2% from peak in 2022) and Chicago (down 0.8%), no significant correction in house prices.

It is true that the US housing market has entered a house price correction in the second half of 2022. It’s also true that the 2.5% drop is small compared to the massive rise in the pandemic housing boom.

US home prices surged 41.4% between March 2020 and June 2022. By November, the gross profit of these pandemic housing booms had dropped to 37.9%. This is a gradual fix, not a full-blown housing crash.

The hottest debate among housing economists and analysts is whether this house price correction will end in 2023 or deepen.

companies like core logic When Jiro We believe the tight inventory environment will include a future house price correction. Meanwhile, companies like Moody’s Analytics, capital economicsWhen goldman sachs I think house prices will fall further Even if home sales are nearing their respective bottoms(You can see housing price forecasts by 29 leading real estate researchers in Japan. here.)

“We expect home prices to fall almost 10% from peak to trough, with weaker household income growth (even in the absence of a recession) and mortgage rates averaging 6.5% this year before returning to 5.5. This is necessary to re-establish housing affordability, given that if mortgage rates were to fall and household income growth strengthened, the decline in housing prices would be less severe. Owners experience a life event that would normally cause a sale in the hope that mortgage rates will fall and market conditions will improve. However, the current resilience of house prices suggests that a house price correction will not pose a serious threat to the financial system or macroeconomic problems.” Moody’s Analytics Chief Economist said: luck.

Want to get the latest housing data?Follow me please twitter so @News Lambert.

This story was originally Fortune.com

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