Are housing market prices cooling? What do the experts project for the coming months?
House prices have now risen for 124 consecutive months but there are finally signs that the housing market is getting back to normal.
After years of constant increase there are now signs that the overheated American housing market is beginning to cool.
Prices skyrocketed in the first half of 2022 and some first-time buyers were pushed out of the market entirely. In the United State in June the median sale price of homes was $416,000; a 13.4% increase on the median figure from June 2021.
This was the 124th month of consecutive year-on-year growth, but experts believe that the increases are likely to stop soon.
Speaking to Newsweek, Dennis McGill, the director of research at Zelman & Associates, said: “We do think there’s going to be home price declines, home price deflation on a national basis.”
In late 2021 his firm concluded that there could be a “modest decline” in the housing market in 2023, but is reviewing that after recent figures suggest that prices already cooling.
“Each forecast since then—the March forecast and then the June forecast—we’ve increased the decline that we expected,” McGill added. “So we now expect about a 4 percent decline in 2023 and we expect a 5 percent decline in 2024, and that’s on the existing home sales side. On the new construction side, we also expect prices to go negative.”
Why might house prices start to decline?
There is a very real sense that the housing market may start to level out in the near future. In recent years the demand for homes has far outstripped the supply of houses, pushing up prices for buyers.
However Lilly Rockwell, an agent at Compass, believes that the imbalance between supply and demand is starting to ease and has notice more homes staying on the market for longer.
“We just have a ton of inventory, and that collided with much less demand because of rising interest rates,” she explained. “It’s taking weeks, if not months, to sell.”
The rise in inventory has been noticed across the industry after a significant fall in the number of homes being sold every month. The National Association of Realtors has said that the volume of home sales fell for a fifth consecutive month in June. Furthermore the pace of annual appreciation decelerated to 13%, making housing investments less profitable.
“Things are still selling, but nowhere near as fast,” said Todd Sachs, a broker at Sachs Realty. “It’s kind of getting back to a traditional real estate market.”