Americans are bench-warming the housing market, creating a game with no winners
Zillow scrolling for a fantasy… Wannabe homebuyers in the US might’ve been encouraged by some news last week: home prices had their biggest annual drop in more than 11 years. Last month, the median existing-home price fell to $389K (down 1.7% from a year earlier), mainly driven by declines in the western half of the country.
The good(ish): It’s the second straight month that home prices fell, a positive sign for prospective buyers. But don’t pop the bubbly yet…
The bad: The median home price is still $100K higher than it was three years ago, while mortgage rates have soared, hitting 6.4% last week for a 30-yr fixed.
The ugly: Housing supply is ridiculously low in part because folks scooped up homes during the pandemic when interest rates were near zero. In 2021, the rate on a 30-yr fixed was ~3% — and folks don’t want to give that up.
Dreaming of a California 2-bedroom… will stick to the one in “The Sims” (FYI: the median CA home price = $815K). Only one-fifth of Americans think it’s a good time to buy a home, a record low, a recent Gallup survey found. Overall it’s a nobody’s market, but there are regional differences:
- Thumbin' my way into North Carolina… The South saw more home sales in April than any other region (nearly 2M homes sold, vs. ~500K for the Northeast, which had the fewest). Over half of Southern home sales were priced between $250K and $500K.
Both teams are on the bench… as buyers and sellers sit on the sidelines. Home sales have plunged from last year. People who want to move aren’t selling because they feel trapped by the “golden handcuffs” of low mortgage rates. People who want to buy aren’t buying because prices are high while supply’s low. Some experts hope for more activity later this year, as the Fed is expected to pause rate hikes while traders are betting the central bank will even start cutting.