Home sales have dipped and in some cities, so have prices


But in the most affordable markets, prices are still rising

Home sales are falling and 2023 sales are projected to be at the lowest level since the housing market crash of 2008. Among the latest evidence – pending home sales plunged by 7.1% in August, according to the National Association of Realtors (NAR).

"Mortgage rates have been rising above 7% since August, which has diminished the pool of home buyers," said Lawrence Yun, NAR’s chief economist. "Some would-be home buyers are taking a pause and readjusting their expectations about the location and type of home to better fit their budgets."

The Wall Street Journal reports this year’s home sales are on track to be the lowest since 2011 when the U.S. was still in the midst of the Great Recession, triggered in part by the collapse of the housing market.

But circumstances are very different today. Then, there was a huge amount of inventory because of a wave of foreclosures, caused in large part by a huge increase in subprime mortgages.

Today, sales have slowed because a spike in mortgage rates makes homes at current prices unaffordable. But the market hasn’t collapsed because there are so few homes for sale. Homeowners with a low mortgage rate aren’t selling because they might get saddled with a rate that is twice as high.

A glimmer of hope

But prospective buyers may see a glimmer of hope. Real estate marketplace Zillow reports that on a nationwide basis, home values dipped 0.1% in September, the first decline since February.

"Mortgage rates approaching 8% are taking the wind out of the market's sails, pushing monthly mortgage payments beyond many buyers' budgets," said Jeff Tucker, Zillow’s senior economist. "While attractive listings are still moving at a brisk clip, competition among buyers is fading quickly due to the shock of mortgage rates on top of normal autumn seasonality."

According to Zillow data, the typical home value is $350,091 nationally, close to where it was at this time last year. Of the 50 largest major metropolitan areas, 31 have home values higher than a year ago.  

That means buyers in those markets are seeing no relief. For example, the median home price in Hartford, Conn., is 11.1% higher than last year. In Milwaukee, home prices are up 8.5% and are 6.4% higher in Providence, R.I., and 6.2% higher in Virginia Beah, Va.

To find a city where home prices are falling, you have to travel to markets where prices surged during the pandemic, such as Austin, where prices are down 10%, and Las Vegas, where home prices have fallen 4.3%.

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