Never seen a rise in mortgage rates (currently at 5.7% vs an average of just 3.2% at the start of 2022), rising house prices and an imbalance Housing supply and demand have been some of the characteristics of the US real estate sector over the past 6 months.
In May, new home sales increased by 10.7% M/M while Y/Y, they recorded a growth of 5.9%; sales of existing homes fell 3.4% in May, marking their fourth straight month of decline and, on an annual basis, they are down 8.6%.
The market generally believes it will be a firm seller’s market with buyers having no market advantage.
While housing affordability is at its lowest since the financial crisis, the rental market is also not showing good signs with occupancy rates at record highs and rents rising.
A CoreLogic chief economist forecasts a gradual slowdown in house price growth to single-digit appreciation within a year, while the U.S. Bank’s chief economist sees a strong housing market with a low housing inventory, low unemployment, rising wages and a large number of buyers entering their prime home buying years.
Realtor.com economists recently revised their forecasts:
He further added: “As housing costs remain high, forcing homebuyers to make tough choices about their budget priorities, the number of homes for sale should continue to grow, building on the recovery that has begun. in May.”
Most industry analysts expect inventory to remain tight in 2022 and 2023 with price appreciation slower than in the past two years; enrollment growth and strong demand continue.
Freddie Mac expects some slowdown in housing demand, forecasting house price growth to slow from 15.9% in 2021 to 6.2% in 2022 and then to 2.5% in 2023; Fourth-quarter home sales are expected to reach 7.1 million and touch 6.9 million in 2022 and increase to 7 million in 2023.
Altos Research indicates that more than 25% of homes currently on the market have reduced their prices unlike how prices have climbed over the past two years.