Sunday, April 14, 2024
HomeusHouse prices on the rise everywhere. Here is where they are falling

House prices on the rise everywhere. Here is where they are falling

High mortgage rates, low supply and a jump in prices has helped shoot up the value of homes in America. However, a silver lining may be emerging for buyers as there are signs of an uptick in new listings and a decline in prices in September, according to data from real estate platform Zillow.

Home values in August jumped 1.3 percent compared to a year ago, Zillow said. But analysts at the firm say that a weekly share of listings reveal that more than 9 percent of homes slashed prices, the highest drop since November 2022.

“This fall’s high rate of price cuts either means buyers have pulled back, sellers have overreached with too-high list prices, or some combination of both,” Jeff Tucker, a senior economist at Zillow, wrote on Thursday.

Zillow also noticed a possible shift in the availability of new listings, with a slight uptick in fresh homes up for sale compared to a year ago. The deficit in the increase at listings was at minus 10 percent as of September 23, but an improvement from two months before when it was at minus 30 percent.

“Between the relative strength of new listings last month, and weaker purchasing flows at the same time, the total count of active inventory continued to climb, like a reservoir slowly refilling,” Zucker said. “The year-over-year drop in active inventory has turned around and begun to shrink.”

In August, the national overall value of homes showed what Tucker has previously described as a “marked cooldown” to a jump of only about 0.2 percent from July.

Austin, Texas, saw the highest fall in value of homes for sale in the largest 50 metro areas in the country, with a drop of more than 11 percent while Hartford, Connecticut, saw a jump by nearly 10 percent.

Soaring mortgage rates, which have hovered above 7 percent for multiple weeks over the last month, have scared away prospective home buyers.

“The monthly principal and interest to buy a typical home has increased 122% in the past three years. So buyers have ample reason to be balking right now,” Zucker wrote.

The increase in listings may have been due to sellers deciding that they need to jump in after a summer that witnessed decent sales.

“The uptick in new listings last month was more of a pulse than a wave,” Zucker pointed out. “Life happens: marriage, divorce, new babies, new jobs, have all been proceeding, and for many households experiencing those events, they need to move, sooner or later.”

Mid-August prices declined from their peak towards the end of June, Zillow data showed.

Last winter, sellers sat out the market after rates jumped. Zillow suggested that August and September saw sellers get back into the market. For buyers, there are encouraging signs, but its unclear whether the decline in prices is a blip or will turn into a pattern.

“It’s too soon to tell if the yet-higher interest rates this fall will send sellers back into hibernation until springtime,” Zucker wrote.

As fall ushers in the changing of the leaves, it could also mean a change in the dynamics of the housing market as more listings and motivated sellers offer better options for buyers.

For sellers, the cooling of the weather could also mean the loss of heat for the housing market.

“Sellers this fall may rue their timing, as this summer’s surprisingly favorable selling conditions fade into memory along with their summer freckles,” Zucker wrote.

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