July’s housing supply level was previously only reached during the peak of the 2008 housing crisis. Seattle, San Francisco and San Diego home values each fell between 4% and 5% in July.Īdding to the general downward forces on home prices is a return of housing inventory. This has come in conjunction with substantial month-over-month declines in several regional housing markets. That marks one of the quickest reversals in growth in the history of the index. Meanwhile, the Zillow Home Value Index is still up from the same month last year, but fell on a monthly basis for the first time since 2012. The S&P CoreLogic Case-Shiller index, a measure of prices in 20 major cities, fell to a 15.8% increase in July. Recent data shows this fall in prices has already begun. “For the longer term, what we need is supply and demand to get better aligned so that housing prices go up at a reasonable level and at a reasonable pace and that people can afford houses again,” Powell said. 21, Fed Chair Jerome Powell warned of a “difficult housing correction.” In the Federal Reserve’s minutes meeting on Sept. Relative to wages, home prices are beyond reach for a majority of working Americans, meaning the demand for homes is unlikely to return without a substantial correction to real estate prices.Ĭlearly the real estate market is backtracking some from its red-hot growth the past few years.Ģ022 Housing Market Showing Shades of 2008ĭepending on who you ask, the housing market may be subject to a widespread, debilitating recession akin to the 2008 housing crash, a more mild pullback or a simple slow in home price growth. For context, this is the highest the figure has been since the Great Recession, when it was 14,923. Using a median new home price of $438,067 and average hourly earnings of $27.32 puts the PI ratio at 16,035. Perhaps most startling, however, is the price-to-income ( PI) ratios on homes. That is to say, more homes are being built than there are households to buy them. Housing starts over the past few years have also substantially outpaced household formation. recorded a 10.4-month supply of new houses, the highest level since 2009. This reflects the fact that many would-be home-buying families are opting to rent instead of committing to a down payment on a house. Furthermore, rent prices are up almost 30% from last year, primarily attributed to single-family rentals.
Data from the National Association of Realtors (NAR) shows July home sales fell nearly 20% year-over-year. With 30-year fixed mortgage rates trending over 6% for the first time since 2008, demand for homes is down substantially from last year’s peak. This has sparked speculation that home prices may be in for a more brutal pullback than many economists projected. housing market may be deteriorating faster than it did in the 2008 recession.
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