NEW YORK–A hopeful sign for some that home prices were starting to decline has been dashed, at least for now. After declining on a year-over-year basis for five consecutive months—the longest run of declines in 11 years—U.S. home prices rose in July.
“The surprisingly quick recovery suggests that the residential real-estate downturn is turning out to be shorter and shallower than many housing economists expected after mortgage rates soared last year,” observed the Wall Street Journal in its analysis. “Scarcity is a big reason. High interest rates have prompted homeowners to stay put rather than buy new homes and take on more expensive mortgages, resulting in an unusually low inventory of homes for sale.”
‘Giving Up’
The report suggested many potential home buyers have given up their search because mortgage rates recently hit a two-decade high. But the homes that do list often still receive multiple bids, driving up the final sales price, the Journal added.
“The result is a market in which the overall volume of transactions has fallen dramatically. Sales of previously owned homes are now down about 36% from January 2022,” according to the Journal. “But prices are generally holding firm outside of a few trouble spots.”
Prices Rise
The Journal added that the national median existing-home sale price rose 1.9% in July from a year earlier to $406,700, according to the National Association of Realtors. In August, prices in 30 of the 50 biggest markets hit record highs, according to mortgage data and technology company Black Knight.
“Even in a market where demand has been hammered by higher rates, the supply just isn’t there,” Diane Swonk, chief economist at KPMG, told the Journal. “Short of a flood in supply, it’s hard to bring these prices down.”
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