As mortgage rates creep beyond 7%, prospective buyers are being priced out of home purchases in some of the nation’s most popular metros, but experts say slowing home sales could actually help sidelined buyers as home price growth follows closely behind. Some markets with declining home sales are already seeing a home price correction, and that trend could spread to a larger share of U.S. metros in the months ahead, Fortune reports.
High-cost tech hubs like Seattle and San Jose as well as a number of housing markets concentrated in the West and Mountain West are among the first to see home prices fall after reaching unsustainable highs during the pandemic. States like Washington, Idaho, California, and Utah, among others, saw a relatively large run-up in prices over the last two years, but as more buyers are forced to put off their home purchasing plans, affordability is making a slow but steady comeback.
The sharpest home price corrections can be found in one of two groups. The first group includes high-cost tech hubs like Seattle and San Jose. Not only are those high-end housing markets more rate sensitive, but so are their tech sectors. The second groups are frothy housing markets like Austin, Boise, and Phoenix. Those frothy markets, which saw home values go far beyond what local incomes can support during the Pandemic Housing Boom, reach levels that local incomes are struggling to support.