After Hot Summer, Home Prices Fall for First Time in Three Years
Meanwhile, per CNN, new home sales were found to have declined 12.6 percent in July primarily due to affordability factors, according to a joint report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau
For the first time in nearly three years, U.S. home prices edged lower on a monthly basis by 0.77 percent, CNBC has reported.
The June to July data, released by Black Knight, a mortgage software, data, and analytics firm, showed the biggest single-month fall in home prices since January 2011.
The firm noted that housing affordability has hit its lowest level in three decades, requiring roughly 33 percent of the median household income to purchase the average home with a 20-percent down payment and a traditional thirty-year mortgage. Currently sitting at about 5.8 percent, mortgage rates have been climbing steadily this year, peaking in June before dropping slightly in July.
“We’ve been advising for quite some time that the dynamic between interest rates, housing inventory and home prices was untenable from an affordability perspective, and at some point, something would have to give,” Andy Walden, VP of enterprise research and strategy at Black Knight, told the business news outlet.
“We’re now seeing exactly that, with July’s data providing clear evidence of a significant inflection point in the market. Further price corrections are likely on the horizon as we move into what are typically more neutral seasonal months for the housing market,” he continued.
Meanwhile, per CNN, new home sales were found to have declined 12.6 percent in July primarily due to affordability factors, according to a joint report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. The median price for a new construction home climbed to $439,400, up from $402,400 the month prior.
“Sales of new homes continue to crumple under the weight of high prices and higher mortgage rates,” Robert Frick, corporate economist at Navy Federal Credit Union, told the news outlet.
“Given builders are pulling back plans to construct more homes, we won't be building our way out of the current housing crisis for years,” he added.
Redfin has reported that sellers of existing homes are becoming warier of the current environment, with many hesitant to part with their homes for less than what they would have received at the height of the pandemic. Additionally, many homeowners are staying put because they have already locked in low mortgage rates. Meanwhile, 21 percent of sellers dropped their asking price in July, the highest figure registered since 2012.
“The buyers who are still in the game are finally getting a break from bidding wars, which means they can be picky,” Redfin agent Pam Lewis said in a release.
“Three months ago, buyers were saying, ‘Get me a building with four walls and I’ll make it work.’ Now they have some choices. They don’t want a home if it doesn’t have the fenced-in yard or guest room on their wish list, and they want a $20,000 price reduction if a home has been on the market for more than a week. I’m telling buyers they’re not likely to see their property values decrease over time, but they may not appreciate as fast as homeowners have become accustomed to in the past few years,” she continued.
Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.