As a housing correction leads to slower sales in the nation’s hottest metros, home prices are beginning to fall from record highs, though not enough to offset waning affordability perpetuated by rising mortgage rates. As a growing share of prospective buyers kick back and wait for price drops in costly U.S. cities, the housing market is at a standstill, one that will likely persist until mortgage rates stabilize or fall from current highs, Realtor.com reports.
Housing experts predict that double-digit price drops could become commonplace in the months ahead, and rent growth could see a similar slowdown as soaring costs chip away at demand. While mortgage rates are expected to remain high throughout the remainder of 2022, the Fed could reduce its basis point increases if inflation begins to slow.
Homes are sitting on the market longer, sellers are slashing prices, and sales are stalling. So the pressure is on home prices to come down. And they’re beginning to oblige.
“The housing market is getting crushed,” says Mark Zandi, chief economist at Moody’s Analytics. “Potential first-time homebuyers can’t afford to buy, potential trade-up buyers can’t afford to move. Investors have gone to the sidelines because they know prices are going to fall further.”
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