For the first time in 20 years, Case-Shiller maintains, home prices fell from June to July. As mortgage rates increase to near or above 7% and a recession seems more and more likely, experts have already seen housing demand decrease. According to Realtor.com, the 30-year fixed rate averaged 6.94% last week, compared to 3.85% last year, and the Mortgage Bankers Association (MBA) expects rates to fall to 5.4% by the end of 2022.
Sellers are said to be “striking” and not selling their homes as they see others forced to cut list prices to woo buyers. Builders are also getting spooked, signaling intent to slow new construction. Nonetheless, demand for housing should recover eventually, given that there are a lot of people who will soon be in need of a home that they own.
MBA’s vice president and deputy chief economist Joel Kan estimated that there are 50 million people in the 28-to-38 age demographic, of which some—or many—are likely to become potential homeowners in the future. For those under 35, the homeownership rate is only 39%, Kan said, while that share increases for people aged 35 to 44, to 61%. So as people age, “we’re fairly confident if we stick to these trends, you will see a very supportive demographic driver of housing demand for a good number of years,” Kan said.
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