In May, home prices fell in their steepest monthly drop since 2012, as we reported in “U.S. Home Prices Fall By Most Since 2012” (27 Jun 2023), U.S. home prices began rising again.
In July, the median sale price of an existing home increased to $406,700, according to the National Association of Realtors (NAR). In August, prices set records in 30 of the country’s 50 largest housing markets, data service Black Knight reported.
Homes for sale remain scarce and July marks the waning months of the summer home-buying season; some buyers are paying a premium to get in before the season ends. High-interest rates have persuaded many homeowners to stay where they are rather than take on new, more expensive mortgages.
Desirable homes on the market still often receive multiple bids, driving up the final selling price. The typical home for sale in July received three offers, the NAR said.
The scarcity has sunk the number of homes sold by 36 percent since January 2022, The Wall Street Journal noted. Active listings in August were down 7.9 percent, year on year, and 46 percent below those in August 2019, according to Realtor.com.
In March, 100 economists surveyed by Pulsenomics predicted home prices would sink about 2 percent this year. Polled again in August, the same group now expects prices to rise 3.3 percent by 2024.
That will be one factor keeping homes at their least affordable in 38 years, the NAR said, factoring together selling price, mortgage interest rates, and family incomes.
TREND FORECAST: As we correctly forecast in “U.S. Home Prices on the Rise” (16 Nov 2021) and many other articles, housing prices would sink slightly but did not crash as they did during the Great Recession and the Panic of ’08.
Prices will not fall to any meaningful degree until the U.S. Federal Reserve begins rapidly cutting interest rates. When mortgage rates fall below 4 percent and hold steady, more sellers will begin to offer their homes and prices will creep downward again.
When mortgage and interest rates fall, the market will flip: the shortage of houses for sale will largely lessen as more houses are built.