U. S. housing rally may be cooling as rise in prices eases
The pandemic housing market rally, a bright spot for the U.S. economy, may already have peaked as the growth in home prices slows.
The asking price for a typical singlefamily home jumped 13.8% from a year earlier, according to an index from Haus, an investment platform for home buyers. That was down from a peak of 16.5% growth in late July.
“The rate of growth was unsustainable,” said Ralph McLaughlin, chief economist at Haus.
The coronavirus pandemic, after causing buyers to pause when lockdowns began in March, fueled a buying frenzy in 2020. Borrowing costs fell to record lows, and Americans decided to upgrade to bigger homes in the suburbs or follow their dreams to mountain towns out West. But in the new year, real estate analysts are watching for a slowdown.
Rates for 30-year loans, below 3% since July, probably will not fall significantly from there. And with homes for sale in short supply, buyers will inevitably be squeezed out of the market.
The Common Haus Price index, designed to be a leading indicator, uses asking prices rather than closed sales to measure the value of a typical U.S. home. It includes eight weeks of data, though it weighs the most recent week most heavily.
Allentown, Pa., showed a 25% jump last week, followed by Austin, Texas, with a 21% increase.
The New York suburbs on Long Island have been red hot, with a rush of buyers trying to escape the city. But there are signs that the market is cooling off. Asking prices fell 2.4% last week, the biggest annual drop among the 100 largest metropolitan areas, according to Haus. They fell 1% in Kenosha County, Wis., the only other decline.
Long Island broker Albert Pantino noticed a pullback around the holidays in November that continued as coronavirus cases surged. But the market now seems to be heating up again, he said.
“The industry was rocking and rolling until Thanksgiving, and it went sideways between Thanksgiving and the first of the year,” Pantino said. “But as long as you have low interest rates and low inventory, that’s your chemistry for a hot sellers’ market. That has not changed.”