Home Prices Are No Longer Falling

New York, NY, September 8, 2023-"Home prices aren’t falling anymore," reports the Wall Street Journal.

“After dipping on a year-over-year basis for five consecutive months-the longest run of declines in 11 years-U.S. home prices rose in July. 

“The surprisingly quick recovery suggests that the residential real-estate downturn is turning out to be shorter and shallower than many housing economists expected after mortgage rates soared last year.

“Scarcity is a big reason. High interest rates have prompted homeowners to stay put rather than buy new homes and take on more expensive mortgages, resulting in an unusually low inventory of homes for sale.

“Many potential home buyers have given up their search because mortgage rates recently hit a two-decade high. But the homes that do list often still receive multiple bids, driving up the final sales price. 

“The result is a market in which the overall volume of transactions has fallen dramatically. Sales of previously owned homes are now down about 36% from January 2022. But prices are generally holding firm outside of a few trouble spots.

“The national median existing-home sale price rose 1.9% in July from a year earlier to $406,700, according to the National Association of Realtors. In August, prices in 30 of the 50 biggest markets hit record highs, according to mortgage data and technology company Black Knight.

“Sales could keep shrinking in the coming months as mortgage rates hover above 7%, and the housing market heads into the typically slower fall and winter. But even if that happens, prices are unlikely to fall significantly, economists say, because there still aren’t enough homes for sale to meet demand.

“‘Even in a market where demand has been hammered by higher rates, the supply just isn’t there,’ said Diane Swonk, chief economist at KPMG. ‘Short of a flood in supply, it’s hard to bring these prices down.’”