Home prices have stopped soaring. Here’s where growth has slowed the most.
In many of the metropolitan markets that are seeing price growth slow or even fall, the supply of homes has outpaced demand. – Getty Images/iStockphoto
Home prices are showing signs of cooling from record highs, and not just in the Sun Belt. But that doesn’t mean a real-estate crash is looming, one economist says.
The slide in global stock markets earlier this week fueled recession jitters, and along with it, renewed speculation that a housing crash was imminent.
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Home prices have been coming down in the face of high mortgage rates that have made it harder for people to afford homes, according to a report by CoreLogic, a real-estate analytics company.
But like the stock market’s rally on Thursday as the latest jobs data calmed investors’ nerves, home prices are also expected to keep rising, albeit at a slower pace, CoreLogic’s chief economist Selma Hepp told MarketWatch.
Home prices nationwide rose 0.3% between May and June, significantly slower than the prepandemic average of 0.8% over the same period, Hepp said.
The slowdown in home-price growth is due to elevated mortgage rates, which are limiting what buyers can afford, CoreLogic said.
Even though rates have fallen significantly over the last week, it’s difficult to tell whether buyers will return to the market when inventory in many areas is still low, Hepp told MarketWatch.
“Given the affordability challenges, how many more people can afford home prices at this level?” she said.
Mortgage applications rose only slightly over the last week, despite the big drop in rates, according to data from the Mortgage Bankers Association.
CoreLogic said that when it came to home-price appreciation, the states with the highest increases on an annual basis were South Dakota, which saw home prices rise 10% in June; New Jersey, up 9.3%; and Rhode Island, up 9.2%. No states posted annual declines.
In many of the metropolitan markets that are seeing price growth slow or even fall, the supply of homes has outpaced demand. In Austin-Round Rock, Texas, home prices fell by 1.55% in June from the previous month, and in Charleston-North Charleston, S.C., prices fell 1.22%.
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In many parts of the South, such as Austin, “you have more inventory from new construction, but you also have more inventory from just existing homes being put on the market, so that’s reducing that pressure on prices,” Hepp said. “But I wouldn’t call it a market crash.”
The number of active for-sale listings in Austin is significantly elevated compared with prepandemic levels, as seen in the chart below. But Austin is “resetting,” rather than seeing a crash, Hepp said, noting that it was one of the strongest housing markets during the pandemic.
The number of active for-sale listings in Austin-Round Rock, Texas, has shot up recently. –
These are top three metropolitan areas where home prices fell the most in June, as compared with the month before, according to CoreLogic:
On the flip side, some markets continue to see home prices growing on a month-to-month basis. In Miami, where many buyers purchase homes with cash rather than relying on mortgages for financing, prices in June rose 1.42% from the previous month, CoreLogic data showed.
These are the top three metropolitan areas where home prices rose the most in June as compared with the month before, according to CoreLogic:
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