{"id":37537,"date":"2022-06-05T12:08:04","date_gmt":"2022-06-05T12:08:04","guid":{"rendered":"https:\/\/harchi90.com\/what-the-housing-market-slowdown-means-for-buyers-sellers\/"},"modified":"2022-06-05T12:08:04","modified_gmt":"2022-06-05T12:08:04","slug":"what-the-housing-market-slowdown-means-for-buyers-sellers","status":"publish","type":"post","link":"https:\/\/harchi90.com\/what-the-housing-market-slowdown-means-for-buyers-sellers\/","title":{"rendered":"What the Housing Market Slowdown Means for Buyers, Sellers"},"content":{"rendered":"<div>\n<ul class=\"summary-list\">\n<li aria-level=\"1\">The red-hot US real estate market of the last two years has reached a turning point. <\/li>\n<li aria-level=\"1\">Three key factors are impacting some changes to buyer and seller behavior.<\/li>\n<li aria-level=\"1\">As dynamics shift, there are signs the housing market is slowing down.<br \/>\n<section\/>\n<section\/>\n                      <\/li>\n<\/ul>\n<div class=\"inline-newsletter-signup &#10;                        headline-regular loading\" id=\"formContainer\" data-component-type=\"inline-newsletter-module\" data-event-label=\"insider_economy\" data-list=\"Insider Today\" data-acq-source=\"economyverticalinline\">\n<section class=\"inline-newsletter-content\">\n<div class=\"js-loader hidden\"><svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"svg-icon \" version=\"1.1\" role=\"img\" width=\"50\" height=\"50\" viewbox=\"0 0 50 50\" style=\"enable-background:new 0 0 50 50;\" xml:space=\"preserve\">\n                        <title>Loading<\/title>\n                        <desc>Something is loading.<\/desc>\n                        <path fill=\"#111\" d=\"M43.935,25.145c0-10.318-8.364-18.683-18.683-18.683c-10.318,0-18.683,8.365-18.683,18.683h4.068c0-8.071,6.543-14.615,14.615-14.615c8.072,0,14.615,6.543,14.615,14.615H43.935z\">\n                          <animatetransform attributetype=\"xml\" attributename=\"transform\" type=\"rotate\" from=\"0 25 25\" to=\"360 25 25\" dur=\"0.6s\" repeatcount=\"indefinite\"\/>\n                        <\/path>\n                      <\/svg><\/div>\n<\/section><\/div>\n<p>The housing market&#8217;s dynamics are shifting. <\/p>\n<p>Since 2020, American home buyers have battled for the nation&#8217;s limited amount of housing inventory and eager home sellers raised their prices to historical highs. <\/p>\n<p>Spurred on by cheap mortgage debt and the need for more space, intense buyer competition resulted in bidding wars that crushed housing affordability &#8211; especially for first-time home buyers.<\/p>\n<p>With inflation at a forty-year high and consumer sentiment at a decade low, American consumers are grappling with rising costs and becoming increasingly wary of homeownership.<\/p>\n<p>As the housing market&#8217;s white hot demand fizzles out, experts told Insider there are two key signs the real estate market is cooling off.<\/p>\n<h2>Higher mortgage rates are curbing demand<\/h2>\n<p>Over the past two years, record low mortgage rates have enticed many buyers to seek out homeownership &#8211; but pandemic-era mortgage deals have come to a close.<\/p>\n<p>Despite falling slightly in May, mortgage rates are much higher than they were in 2021. According to Freddie Mac, the average US fixed rate for a 30-year mortgage came in at 5.09% this week, falling from a pandemic high of 5.30% but a notable increase from a pandemic low of 2.68% in December 2020.<\/p>\n<p>As mortgage rates put additional pressure on housing costs, more and more homebuyers are sitting on the sidelines &#8211; and it&#8217;s putting a lid on the housing market&#8217;s unprecedented demand. <\/p>\n<p>&#8220;Mortgage rates continued to inch downward this week but are still significantly higher than last year, affecting affordability and purchase demand,&#8221; Sam Khater, chief economist at Freddie Mac, told Insider.  &#8220;Heading into the summer, the potential homebuyer pool has shrunk, supply is on the rise and the housing market is normalizing.&#8221; <\/p>\n<h2>Prices are declining in some markets<\/h2>\n<p>With buyers becoming increasingly priced out of the market, house price growth has begun to moderate in certain areas of the country.<\/p>\n<p>This is because price drops have become more common as sellers reset their price expectations.  &#8220;The picture of a softening housing market is becoming more clear, especially to home sellers who are increasingly turning to price drops as buyers become more cost-conscious under higher mortgage rates,&#8221; Daryl Fairweather, chief economist at Redfin, said in a statement.<\/p>\n<p>According to Redfin, 19.1% of home sellers dropped their asking price during the four week period ending May 22 &#8211; marking the highest level since October 2019.  <\/p>\n<p>&#8220;Many places like Boise or Sacramento that saw a surge in migration and a sharp increase in home prices over the past two years have now seen an abrupt drop-off in demand, leading sellers to drop their prices with increasing frequency,&#8221; Fairweather said.<\/p>\n<p>At the same time that prices are falling, housing inventory is climbing.  These two factors combined could further cool down the housing market.<\/p>\n<p>&#8220;A home&#8217;s price is driven by the balance of supply and demand, and when demand drops off and supply increases like it is now, rapid price increases evaporate quickly,&#8221; Fairweather said.<\/p>\n<h2>Builders are stepping up housing construction <\/h2>\n<p>The US is in the middle of a severe housing shortage &#8211; but the homebuilding sector is increasing its production and welcoming more workers to the industry.<\/p>\n<p>According to real estate database Altos Research, inventory of unsold single family homes in the US rose 8.2% last week, to 344,000 homes &#8211; an increase of 26,000 more homes. <\/p>\n<p>&#8220;At an absolute level it is not unprecedented for inventory to grow by 25,000 in a week,&#8221; Mike Simonsen, founder and creator of Altos, said in a statement.  &#8220;But since we&#8217;re coming off the record lows, as a percentage, that may be the biggest jump we&#8217;ve seen. At 344,000 homes we now have 6% more than last year.&#8221;<\/p>\n<p>Although the homebuilding sector is experiencing a dearth of skilled workers, May&#8217;s uptick in construction is likely attributed to gains in employment. <\/p>\n<p>During the month, residential building construction employment increased by 5,000, while non-residential construction added 2,400 jobs.  Overall, residential building grew 7.6% compared to pre-pandemic levels, while non-residential building remained 5% below. <\/p>\n<p>&#8220;More hammers at work, more homes,&#8221; Odeta Kushi, the deputy chief economist at First American, told Insider.<\/p>\n<p>As builders increase their employment and production levels, it&#8217;s helping to close the imbalance of supply and demand in the real estate market.  With more homes being built buyers are now facing less competition for housing, especially as mortgage rates dampen demand.  This vibe shift could lead to further declines in home prices &#8211; and ultimately a larger cool down in the market. <\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The red-hot US real estate market of the last two years has reached a turning point. Three key factors are impacting some changes to buyer and seller behavior. As dynamics shift, there are signs the housing market is slowing down. Loading Something is loading. The housing market&#8217;s dynamics are shifting. Since 2020, American home buyers &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/harchi90.com\/what-the-housing-market-slowdown-means-for-buyers-sellers\/\"> <span class=\"screen-reader-text\">What the Housing Market Slowdown Means for Buyers, Sellers<\/span> Read More &raquo;<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","spay_email":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[8],"tags":[],"jetpack_featured_media_url":"","jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"fifu_image_url":"https:\/\/i.insider.com\/629a3b9259963a00189e3f45?width=1200&format=jpeg","_links":{"self":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/posts\/37537"}],"collection":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/comments?post=37537"}],"version-history":[{"count":0,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/posts\/37537\/revisions"}],"wp:attachment":[{"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/media?parent=37537"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/categories?post=37537"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/harchi90.com\/wp-json\/wp\/v2\/tags?post=37537"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}