|
New data from Jeff Tucker at Zillow highlights the ongoing challenges with housing affordability despite an ongoing moderation in housing prices. According to data, typical mortgage payments are now an astounding 75% higher than they were in June 2019. That said, home value growth is decelerating. “Affordability obstacles are the likely leading cause for decelerating home value growth. Annual home value appreciation cooled for the third consecutive month in June, stepping down to 19.8% from a record high of 20.9% in April. But it still towers over the 4.6% year-over-year growth recorded in June 2019, before the pandemic. The typical U.S. home value now stands at $354,165.” Zillow’s Nicole Bachaud also reports that demand is strongest for the lowest-priced homes in markets across the country. This highlights the ongoing challenges homebuyers are having with affordability, making the lower-priced homes more competitive despite a cooling market. Despite this, we are seeing price cuts increasing with 10% of listings across all pricing tiers seeing decreases. Tim Ellis of Redfin reports on the housing cooldown, noting that for the first time in 17 months, the average home sold for under listing price. Touring, search activity, and mortgage volume are both reported to be down, with the median home sale price now sitting at $370,000, up 5.9% year-over-year. As such, we are seeing a corresponding decrease in new listings. |
 |
|
Source: Redfin (September 2022) Redfin Chief Economist Daryl Fairweather had this to say about the data: “While the cooldown appears to be tapering off, there are signs that there is more room for the market to ease…The post-Labor Day slowdown will likely be a little more intense this year than in previous years when the market was super tight. Expect homes to linger on the market, which may lead to another small uptick in the share of sellers lowering their prices. Homebuyers’ budgets are increasingly stretched thin by rising rates and ongoing inflation, so sellers need to make their homes and their prices attractive to get buyers’ attention during this busy time of year.” Selma Hepp of CoreLogic reports on the US CoreLogic S&P Case-Shiller Index, which showed an 18% year-over-year increase, which is down from the 19.9% gain in May. This marks the third straight month of lower annual home price appreciation. This deceleration was the most pronounced in west coast markets. Fannie Mae comments on the role new construction plays in the ongoing deceleration of the housing market, noting that “the July reading showed the number of completed homes for sale breaking out of the tight range it had been in since March 2021, rising to the highest level since September 2020. If more completed new homes begin to sit on the market without moving, this may prompt builders to begin discounting current prices more aggressively to attract buyers, which aligns with our view of decelerating home price growth through the end of the year.” |