Home prices may be on the verge of cooling off

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Black Knight’s latest reading on home prices indicates that they reached another record high in July. They rose 2.3% over the same period last year. This is a larger annual gain than the roughly 1 percent recorded in June. August’s comparison will be even greater because prices started falling last August. Although prices are still rising, as they do usually at this time, the gains have fallen below their average of 25 years. After significantly exceeding their historical averages between February and June, this is a sign that prices may be slowing down again. This is a sign that prices are slowing down again. All of these factors together highlight the importance of focusing on seasonal adjusted month-to-month movements, rather than relying solely on the annual home price growth rates. Mortgage rates are the reason for cooling down. Last summer and fall they rose dramatically, which caused prices to drop. Then they went down during the winter and spring. This caused home prices to rise again. Rates are now back above 7%, and they reached 20-year highs in august. Active inventory, however, is about 48% below the levels seen from 2017 to 2019.

“While the uptick in new listings is good news for home shoppers, inventory remains persistently low despite record-high mortgage rates putting a damper on demand,” said Danielle Hale. Chief economist at Realtor.com.

“While the uptick in new listings are good news for home shoppers but inventory remains persistently low despite record-high mortgage rates putting a damper on demand,” she Active inventory, however, is about 48% below the levels seen from 2017 to 2019.

“While the uptick in new listings is good news for home shoppers, inventory remains persistently low, even with record-high mortgage rates putting a damper on demand,” said Danielle Hale, chief economist for Realtor.com.

A drop in prices would come as some relief to buyers, but unlikely enough.

The jump in home prices since the start of the Covid pandemic, combined with much higher mortgage rates has crushed affordability.

It now takes roughly 38% of the median household income to make the monthly payment on the median-priced home purchase, according to Black Knight. Black Knight reports that it takes 38% of the median household income to pay for a median-priced home.