Thu, December 08, 2022

Time to Buy a House? Housing Market Weakens Slightly

Economy

One of the main gripes with adult life in the US is that the housing market is out of control. Rent is rising sharply, especially in major cities, while wages haven’t nearly caught up. Not many Americans in their 20s and 30s even dare dream of buying a home due to the constant skyrocketing prices.

However, since April’s peak, there has been a slight weakening in the housing market. That may spell hope that someday, housing will become more broadly available. Of course, the situation isn’t great everywhere, with prices rising in certain places.

If we look at the June results for the S&P CoreLogic Case-Shiller 20-city house price index, we can see a decrease over the previous month. Year-on-year, the price is still higher by a significant margin than in 2021, but the gap is narrowing. In May, the results of the index displayed a 20.5% growth over 2021, but in June, that has shrunk to 18.6%.

That indicates a downward trend, especially considering the sudden velocity. Since the massive peak in April, the prices in the housing market have started to decline rapidly.

The national index tells us the same story, showing a readjustment of 0.3% from May to June. Although the difference in results is smaller, the encouraging news is that it’s the lowest increase in two years.

Real-estate companies and economists are worried about the stall in the market, although it’s likely good news for the average house-buyer. Seattle is the quickest to decline, with its prices shrinking 1.9% from May to June. Following it are San Francisco at -1.3%, San Diego at -1.7%, and Los Angeles at -0.4%.

The driving factors behind the deceleration in growth are rising mortgage rates and lower buyer confidence. As homes remain out of most people’s price ranges, the future of the housing market is up in the air.

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