Are real estate prices falling?

(NEXSTAR) — After U.S. inflation cooled more than expected last month, you may be wondering whether or not the housing market is cooling. The answer is yes, but with an asterisk.

The median sale price of a home in June 2022 was $428,400, an 11.2% increase from the same period last year. Even if it’s a double digit number increase in the prices, it is also the the smallest year-over-year increase “in almost two years,” says Tim Ellis, market analyst at Redfin.

The data indicates that while US home prices fell 0.4% from June to July, other factors continue to impact home affordability. Even though house prices remain high, Ellis says the market is balancing out due to a variety of factors, including higher mortgage rates and falling demand.

Data from Redfin shows that the supply of homes for sale in the United States increased by 2% in June, which was the first year-on-year increase since July 2019. Meanwhile, sales of homes fell 16% year over year in June. It’s the biggest drop since May 2020, according to Ellis.

“The market is a mixed bag for buyers,” Ellis said. “They are seeing higher monthly housing payments than earlier this year due to relatively high mortgage rates, but face less competition for homes, which often allows them to make less risky offers that include protections such as inspection and assessment contingencies.”

Several large American cities are already experiencing a slowdown in real estate markets.

A recent study by Redfin showed that the top 10 fastest cooling real estate markets include Seattle; Denver; Boise, Idaho and Tacoma, Washington. Additionally, several California cities made the list, including San Jose (#1), Sacramento (#2), and Oakland (#3), among others.

Additionally, homes for sale are staying on the market much longer than they were last year, the data shows. In July, about 61.2% of homes for sale had been on the market for at least a month, up 54.4% from July of last year.

“The country’s economic woes have already cooled the housing market, and will likely continue to dampen demand,” said Redfin chief economist Daryl Fairweather.

So how much have mortgage payments increased? While that number varies, June reports from the National Association of Realtors show that Americans who buy median-priced single-family homes (with a 10% down payment) are paying about $800 more per month than in January.

Buy vs Rent

Even if renting remains more affordable than buying, it is still much more expensive than a few years ago.

Although the increases appear to be slowing down, the rates have not decreased significantly. The median rent price in the 50 largest metropolitan areas in the United States is $1,876, which the realtor said is a new high for the 16th consecutive month. The median rent for bachelor apartments is $1,544, and $1,738 and $2,104 for one-bedroom and two-bedroom apartments, respectively.

Overall, rent has increased by 14.1% since June 2021, according to data from the real estate agent. While data shows rent growth is slowing, current rates are still 23.9% higher than 2020 and 27.6% higher than 2019.

About Martin Aaron

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