A Major Housing Shift Is Underway, Experts Say

After years of relentless price hikes, bidding wars, and an ever-growing supply deficit, the housing market is showing its first signs of a slowdown, one which, indeed, will be very slow to effect any tangible changes, says Bill McBride in the CalculatedRisk Newsletter. Year-over-year home sales fell 5.9% in April, likely a result of rising mortgage rates creating substantial affordability concerns for prospective buyers.

Housing inventory rose slightly in May, but the majority of homes included in the nation’s total supply are still under construction, and very few completed homes are currently hitting the for-sale market. Home prices are still soaring to new highs, across the nation, and while it may take a while to see price growth slow, experts say that reductions are possible and even likely in some housing markets throughout the remainder of 2022 and into the start of 2023.

“Reported house price growth is still very strong, and the Case-Shiller National Index will show 20%+ year-over-year growth for April (to be released on June 28th). The recent slowdown will take some time to show up in the price indexes…”

“We have to be patient waiting to see the impact on house prices of the slowdown in sales due to the significant data lags. Meanwhile, Altos Research CEO Mike Simonsen noted this week that “price reductions” are the story right now.”

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