Buyer Cooldown Upending Expert Predictions

Despite previous rosy forecasts, buyers' plans to purchase a home in the next six months dropped to a two-year low in June. New and existing home sales have also fallen to record lows.

A variety of conditions are coming together to slow down buyer interest: rates for 30-year fixed mortgage loans have increased by more than 0.8 percent, new tax law limits on SALTs are also a consideration, and those seeking to rent a home rather than buy will find in more than half of the major U.S. markets that renting is not cheaper, per Attom Data Solutions. Bloomberg reports that affordability is an issue for mid-tier buyers as well as entry-level buyers, as the move-up market price range is ticking higher and higher.

The protracted decline in top-tier home-buying conditions could be a mere starting point that trickles down through the lower tiers. The top third of income earners account for 60 percent of the dollar value of “owned dwellings,” as per the Bureau of Labor Statistics Consumer Expenditure Survey. This group, albeit small, has more incentive than ever to stay put or move to a lower-tax state.

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