San Francisco Chronicle - (Sunday)
Home price growth has shown a clear sign it’s reaching its peak
It’s hard to not feel bad today for homebuyers, who are being simultaneously squeezed by rising mortgage rates and ever-higher home prices. But at long last, some relief seems to be on the horizon.
“How’s the Housing Market This Week?” is our regular column in which we look at real estate statistics. For the week ending Sept. 10, they indicate that the runaway real estate inflation that homebuyers have been struggling to keep up with is slowing down — if just by a bit.
“Although home prices continue to register double-digit growth relative to one year ago, the rate took a notable step back this week to the lowest pace since January,” notes Realtor.com Chief Economist Danielle Hale in her analysis.
Here are the latest figures and what they mean for both homebuyers and sellers so that all can stay on top of today’s fast-changing market.
Home prices are still growing, but they’re definitely slowing
In August, home prices hovered at a national median of $435,000. And prices are still rising — by 11.7% for the week ending Sept. 10 compared with this same week last year.
While that’s the 39th straight week of double-digit growth, the glimmer of good news for buyers is that this week’s rate does mark the lowest level seen since January. The home price growth in previous weeks clocked in even higher — in the 15% to 16% range throughout July, followed by the 13% to 15% range in August. In this context, this latest week’s 11.7% price growth doesn’t seem so bad.
Plus, now that summer’s homebuying frenzy is over, real estate prices are already sloping downward along with dwindling temperatures.
“Home prices typically decline as we move into the second half of the year, one of the key seasonal trends that help make fall the best time to buy a home,” says Hale.
In fact, statistics suggest that the very best time to buy a house in the entire year is the last week of September, when prices are slated to be $20,000 lower than June’s all-time high of $450,000.
In other words, home shoppers who want to double down on their efforts right when the cards are heavily stacked in their favor had best hit those open houses hard right now before this prime window of opportunity closes.
New real estate listings dropped a lot
For the week ending Sept. 10, the number of new home sellers putting their properties on the market dropped by 13% compared with this same week last year. That’s the 10th straight week of year-over-year declines, and a double-digit drop at that.
Clearly, “sellers are less optimistic about conditions compared to a year ago, which is a likely factor behind the scarcer new listings trend,” says Hale.
Nonetheless, overall housing inventory — a combination of these fresh listings and stale ones still on the market that have yet to find a buyer — is strong, up by 27% over last year.
“While the number of newly listed options was smaller, today’s shoppers have more than five homes to consider for every four they had at this time a year ago,” Hale explains.
Home sales are slowing
Since the COVID-19 pandemic, the pace of home sales has sped up, with median days on the market in August clocking in at a mere 34 — 22 days faster than this same month from 2017 to 2019.
Yet finally, this frenetic rush is mellowing. For the week ending Sept. 10, properties spent six extra days on the market compared with a year earlier. That’s the seventh straight week of homes sticking around for sale longer than last year.
Still, Hale reminds us, “relative to pre-pandemic, shoppers need to make faster decisions.” And the pace of sales will range widely based on where the house hunt is taking place.
Homes in the country’s hottest markets — currently in the Northeast and Midwest, which offer affordability — will still disappear quickly. (For example, listings in the hottest market of all, Manchester, NH, linger a mere 23 days before being snapped up.) “And with more shoppers than ever before willing to look across state lines for a home, affordable areas are likely to see ongoing demand,” adds Hale.
Mortgage rates broke the 6% mark
According to Freddie Mac, for the week ending Sept. 15, the average 30-year fixed mortgage rate increased to 6.02%, up from the previous week’s 5.89%.
And since many are bracing for the Federal Reserve to hike its short-term interest rates at its meeting next week to combat stubborn inflation, mortgage rates may continue rising, making this fall’s housing market more of a mixed bag of good and bad news for buyers.
“Higher mortgage rates combined with still-high home prices are making it challenging for homebuyers as we head into what historically has been the best time of the year to find a better deal,” Realtor.com Senior Economist George Ratiu notes. “Something has to give.”