After US inflation cooled more than expected last month, you may be wondering whether or not the housing market is cooling off. The answer is yes – but with an asterisk.
The median sale price of a home in June 2022 was $428,400, an increase of 11.2% from the same time last year. Although this is a double-digit increase in the price, that too the smallest add up year after year “in almost two years,” Red fins market analyst Tim Ellis says.
Data shows that while US house prices fell 0.4% from June to July, other factors are still impacting the affordability of houses. Although home prices remain high, Ellis said the market is in balance due to a number of factors, including higher mortgage rates and declining demand.
Red fins data shows the supply of US homes for sale increased in June by 2%, which was the first year-over-year increase since July 2019. Meanwhile, home sales plummeted 16% year-over-year in June. That was the biggest drop since May 2020, according to Ellis.
“The market is a mixed bag for buyers,” Ellis said. “They are seeing higher monthly mortgage payments than earlier this year because mortgage rates are relatively high but face less competition for homes, which often allows them to make less risky offers that include protections such as inspections and appraisal contingencies.”
Several major US metros have seen a slowdown in the housing market.
The latest Redfin research shows the top 10 the real estate market is cooling the fastest including Seattle; Denver; Boise, Idaho, and Tacoma, Washington. In addition, several California cities made the list, including San Jose (No. 1), Sacramento (No. 2), and Oakland (No. 3), among others.
Moreover, homes that are sold remain on the market longer than last year, data shows. In July, around 61.2% of homes were on the market for at least a month – that’s 54.4% higher than July last year.
“The country’s economic woes have cooled the housing market, and they are likely to continue to dampen demand,” said Redfin Chief Economist Daryl Fairweather.
so how much has the mortgage payment increased? Although the number will vary, June reporting by the National Association of Realtors shows Americans who bought the median single-family home (with a 10% down payment) paid about $800 more per month than in January.
Buy vs. rent
Although renting is still cheaper than buying, it is still more expensive than it was a few years ago.
Although the increase seems to be slowing down, the rates have not decreased significantly. The median rental price in the 50 largest metro areas in the United States is $1,876, which Realtor says is a new record for the 16th consecutive month. The median rent for a studio apartment is $1,544, and $1,738 and $2,104 for one-bedroom and two-bedroom apartments, respectively.
Overall, rents are up 14.1% since June 2021, per Realtor data. While the data shows rent growth is slowing, the current rate is still 23.9% higher than in 2020 and 27.6% higher than in 2019.