Signs the housing market may be slowing
As we approach fall 2022, there are several housing market indicators which point to a slowdown in the housing market.
1. Housing inventory increases
A housing shortage across the country has added fuel to the fire of rising house prices. But builders are working hard to eliminate the shortage.
According to a Realtor.com report, the available inventory of homes is 18% higher than in June of last year. As the number of available homes increases, buyers can afford to be more discerning about their opportunities.
2. Fewer mortgage applications are submitted
In July 2022, the Mortgage Bankers Association (MBA) reported that weekly mortgage applications fell 18% from the same week a year earlier. Although the MBA reported a slight increase in applications at the beginning of August, mortgage applications are still down 16% compared to last year.
With fewer mortgage applications, fewer homes are being sold.
3. Sellers lower prices
Sellers who have to sell their homes lower their prices. Price declines are particularly evident in hot markets once dominated by the pandemic. According red finmore than 40% of home sellers are lowering their prices in places like Salt Lake City, Boise, Sacramento and more.
On the surface, lower prices are a good thing for buyers. However, rising interest rates may reduce potential savings for borrowers. Before making an offer, consider the final cost of the mortgage payment when interest is included.
4. Fewer people are buying homes
Over the past few months, mortgage interest rates have risen sharply. Rising rates make it harder to buy a home. The budgetary realities of many potential buyers have led many to give up the search.
red fin noted that requests for home visits fell 14% in June 2022 compared to the same period last year. Of course, that doesn’t mean no one is shopping for a home. There are a lot of home buyers there. But demand has dropped from its peak.
5. Real estate companies announce layoffs
Compass and Redfin , two major real estate companies, announced layoffs in June. The layoffs appear to be in response to rising interest rates, putting a damper on the previously booming housing market.
As these companies reposition themselves to better adapt to changing market conditions, the layoffs are not a good sign for the housing market. If these real estate companies lay off workers, a downturn may be on the horizon.
If more real estate companies start announcing layoffs, it could create more problems for home sales.