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| Numbers provide peek at home price peak
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Home prices are still soaring. In July, median sales prices surpassed a record $450,000, up 16.6% from July 2021,
That is 31 straight months of double-digit increases. But real estate industry professionals know it cannot go on forever.
There are plenty of numbers indicating that home prices are peaking. In June, the number of for-sale listings rose by 18.7%, the second straight month of growth, and the fastest pace since July 2017.
That translates to an additional 98,000 homes a day compared with the same time last year. Granted, there is a long way to go before housing inventory levels get back to where they were before COVID-19. In June 2019, there were 53.2% more homes on the market.
Nonetheless, this gush of new sellers is likely motivated by the desire to cash in before prices slow down, or even decline.
Rising mortgage rates are already applying the brakes to many home-shoppers’ dreams. The cost of financing 80% of a typical home rose 57.6% since last year, amounting to an extra $745 per month.
One bright spot for buyers is the possibility of massaging the price down during final sales negotiations. The market is starting to re-balance, with listings rising just as buyers reach the breaking point. Sellers jumping into the market today will likely find the crop of buyers growing more selective.
A danger for the market is sellers who grow decide not to sell, thinking they have “missed the peak.” For the week ending July 16, new listings actually dropped by 3% - the second straight week of declines.
While inventory overall is still up 29% from a year earlier, a larger portion of these listings are “stale” - picked through and passed over. This might help explain why 14.9% of all sellers cut listing prices in June, versus just 7.6% a year earlier.
Odds are rates will continue upward as the Federal Reserve fights inflation by raising short-term interest rates.
Buyers should rate-test their budgets, so that they know how to react in case mortgage rates climb again, as they are likely to do heading into the fall.
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Rocket Mortgage, LLC; NMLS #3030; www.NMLSConsumerAccess.org. Licensed in 50 states. AL License No. MC 20979, Control No. 100152352. AR, TX: 1050 Woodward Ave., Detroit, MI 48226-1906, (888) 474-0404; AZ: 1 N. Central Ave., Ste. 2000, Phoenix, AZ 85004, Mortgage Banker License #BK-0902939; CA: Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act; CO: Regulated by the Division of Real Estate; GA: Residential Mortgage Licensee #11704; IL: Residential Mortgage Licensee #4127 – Dept. of Financial and Professional Regulation; KS: Licensed Mortgage Company MC.0025309; MA: Mortgage Lender License #ML 3030; ME: Supervised Lender License; MN: Not an offer for a rate lock agreement; MS: Licensed by the MS Dept. of Banking and Consumer Finance; NH: Licensed by the NH Banking Dept., #6743MB; NV: License #626; NJ: New Jersey – Rocket Mortgage, LLC, 1050 Woodward Ave., Detroit, MI 48226, (888) 474-0404, Licensed by the N.J. Department of Banking and Insurance.; NY: Rocket Mortgage, LLC, 1050 Woodward Ave., Detroit, MI 48226 Licensed Mortgage Banker-NYS Department of Financial Services; OH: MB 850076; OR: License #ML-1387; PA: Licensed by the Dept. of Banking – License #21430; RI: Licensed Lender; WA: Consumer Loan Company License CL-3030. Conditions may apply.
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