In some locations, prices will likely flatten or perhaps dip as much as 5% – but even with a slight drop in July, home prices were still up 10.8% year-to-year.
CHICAGO – The National Association of Realtors®’ (NAR) reported a slight drop in home prices in its latest report, leading some speculators to wonder if it’s the first volley of major price declines this fall.
According to NAR, home prices fell $10,000 month-to-month to $413,800 in July – but prices were still up 10.8% year over year.
“Prices are still growing [annually] by double digits,” says Realtor.com Chief Economist Danielle Hale. “We have a long way to go before we see prices decline.”
On the other hand, NAR found that existing-home sales fell 20.2% year-over-year, while new-home sales dropped nearly 30% in July year-to-year.
“Economics 101 says prices have to decelerate, and that’s what we’re seeing today,” says Devyn Bachman at John Burns Real Estate Consulting.
The decline will not unfold equally across the country, and Moody’s Analytics Chief Economist Mark Zandi expects home prices to flatten or possibly fall as much as 5%, particularly if a recession does not materialize.
Some of the largest price corrections could occur in construction as new homes are typically more expensive than existing ones, and rising inflation, recession fears, record-high prices and higher mortgage rates are scaring off buyers.
And, some of the largest corrections could transpire in states like Texas, where new construction has boomed, as well as in the more costly markets of Florida.
Source: Realtor.com (08/24/22) Trapasso, Clare
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