Source: The Washington Post —
After a stunning rise in home prices enriched sellers and keyed upbuyers into frantic bidding wars, there are signs that the U.S. housing market is starting to cool amid a surge of new inventory and higher interest rates.
“For sale” signs are multiplying in previously red-hot markets like San Jose, Chicago and Phoenix. The volume of U.S. monthly home sales have registered double-digit declines in the past year, according to estimates from Zillow and the National Association of Realtors. In May alone, the number of houses sold is down 19 percent from the year-ago period, according to Zillow, and preliminary data suggests the falloff was more pronounced in June.
“This year’s buyers are just much more savvy, and they deserve to be because they’re going to be paying more to purchase the home,” said Daniel Valdez, an agent with eXp Realty in Sacramento.
The slowdown has, so far, provided little relief to buyers. Instead, analysts say, a growing affordability crisis ― driven by the collision of inflation and rising interest rates ― is forcing many would-be buyers to walk away.
That’s because some sellers, mindful of the stratospheric gains of 2020 and 2021, which brought the average home price up more than 40 percent, are reluctant to lower their expectations. And home values are still gaining, up 19 percent on average in the year ending in June, according to the data firm Black Knight.
“The market’s cooling off, but that cooling has happened on the backs of buyers getting discouraged, on buyers being forced out of the market,” said Jeff Tucker, a senior economist at Zillow. “People who thought they would join the party are being greeted by absolute carnage as far as affordability right now.”
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