historic.that’s the best way to explain The pace of the US housing market slowed this summer.
just look Inventory data for JulyActive listings on realtor.com jumped from 128,200 to 747,500 last month. This is his biggest jump back in 2016 in the site’s database. The previous record rise was in May 2022 (+106,900 units) and was nearly overtaken by the June 2022 jump (+102,900 units).
Inventories typically rise at this time of year, but seasonality alone cannot explain this rise.the culprit is Ongoing housing cooldownSimply put, the US housing market is pandemic housing boom Pandemic housing slump.
“Rising interest rates, combined with higher house prices, have pushed the cost of owning a home up 30% since the beginning of the year, even after allowing for recent declines. is influencing the way consumers think,” said Ari Wolff, chief economist at Zonda. luck. “many [buyers] I found myself torn between making one of the biggest purchases of my life today or waiting. ”
Soaring mortgage rates boosted the entire US housing market in cooldown mode-However Some markets are cooling off much more quickly than othersSome have even seen inventory levels reach levels at which home prices begin to fall.
Of the 917 local housing markets tracked by realtor.com, 898 had increased inventory levels (the number of unsold properties) between March and July. Of these, 346 markets saw an increase of at least 100%. 57 markets increased inventory by more than 200%. This includes Idaho Falls, Idaho (up 387%). Ogden, Utah (up 372%); Provo, Utah (up 371%); Coeur d’Alene, Idaho (up 365%); and Salt Lake City (up 355%).
it is clear Housing markets in the Mountain West, Southwest, and Southeast regions You will see the quickest fix. Many of these markets, like Austin and Phoenix, were among the go-to spots for pandemic movers. These markets have attracted legions of white-collar professionals who have found that COVID-19 has allowed them to work permanently remotely. Ironically, many markets where they escaped, such as San Francisco and Seattle, are also seeing rapid corrections.
“Over the past few months, the market feels like it’s in free fall in some markets in the Southeast and Mountain West as cancellations rise, homes stay in the market longer and more homes announce price cuts. ‘, says Wolf. “In some of the hardest-hit markets, there are signs that demand for housing is starting to level off, albeit at lower levels than seen in the last two years. Affordability, see how long this trend lasts.”
Inventory levels have risen rapidly (up 96% since March 2022), but are still well below pre-pandemic levels. Nationally, the July 2022 active list is 44% below July 2019.
Of the 917 markets tracked by realtor.com, 35 have inventory levels above July 2019. This is up from his June, when only 18 markets were above pre-pandemic inventory levels. But this shows that we still have a long way to go before we return to normalcy.
However, the balance may soon be thrown off. HousingWire’s lead analyst Logan Mohtashami believes pre-pandemic inventory levels could be reached in 2023. in his heart, Soaring mortgage rates Historically tight inventory levels have left us the only way to keep us out of an “overheated” housing market where homebuyers had little choice but to join the bidding war.
There is another reason to expect more stock.Homebuilders now have both Record number of homes under construction When Record number of unsold homes under constructionThose builders are already struggling to sell. When those new dwellings hit the market, Housing markets in some areas may temporarily become oversupplied.
“I think we are well aware that in some markets, inventory build-up can be a bad time, a time when demand is significantly weaker,” Wolf told Fortune. “Housing is considered structurally in short supply, but there is a risk that there will be more homes on the market than buyers in the short term due to cyclical factors.”
Fast-growing markets such as Atlanta, Austin, Dallas, Houston and Phoenix are particularly vulnerable to temporary oversupply.
disconnected from economic fundamentals
became a regional housing market furthest from the underlying economic fundamentals now fastest cooling. these are foamy or foamy marketincluding places like Denver and Nashville, only saw home prices skyrocket during the pandemic. Historically low mortgage rates Disappeared this spring, would-be buyers began to bear the brunt of record home price increases. As such, some buyers have stopped or paused their searches.
Simply Overvalued compared to underlying economic fundamentals It does not guarantee a correction of housing prices. That said, a significantly “overvalued” housing market, historically speaking, carries a higher risk of housing price declines.according to Moody’s Analysis shows that the regional housing market, currently “overvalued” by more than 25%, is: Home prices are very likely to fall by 5% to 10% over the next 12 months.
According to John Burns Real Estate Consulting, some housing markets, such as Las Vegas, have reached levels of inventory supply that are likely to cause home prices to fall.
But, at least nationally, industry insiders have mixed feelings about falling home prices.
Predictive model created by Mortgage Bankers Association, fannie mae, freddie mac, core logicWhen Jiro Both will see U.S. home prices rise over the next year. Meanwhile, John Burns Real Estate Consulting, Capital Economics, Zelman & Associates and Zonda are now forecasting a modest decline in home prices. It’s hardly a consensus.
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