US Home Prices Fall for the First Time in Three Years
05:45 GMT 25.08.2022 (Updated: 06:08 GMT 25.08.2022)
© AP Photo / Rick Bowmer
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Home prices rose drastically during the first years of the COVID-19 pandemic as people moved out of the city and into the suburbs. Those who began their work-from-home careers also saw an opportunity to move somewhere new and snatch up what few houses on the market were left. An increase in demand and low supply caused housing costs to explode.
US Housing market costs are dropping as buyers are being scared off by rising mortgage interest rates. Home prices dropped just 0.77% in July—according to the mortgage data firm Black Knight—marking the first monthly decline in three years and the largest single-month decline in home prices since January, 2011.
June and July are typically productive months for the housing market, when home sellers can maximize their sales. This summer was the second-worst July performance for the housing market, coming just behind July 2010, when there was a 0.9% decline in the market during the Great Recession during which rising home prices and careless credit issuing led to an increase in subprime mortgages.
Last month almost 70% of homes being sold in Boise, Idaho fell in price, while 60% of homes in Denver, Colorado also dropped their asking prices. Salt Lake City, however, continued to be the second-highest city in the West in terms of home price increases.
Interesting analysis from @UtahFoundation, showing Salt Lake remains second highest in the nation for home price increases from June to July — while prices across U.S. are either beginning to flatline or, according to some sources, declining #utpolhttps://t.co/cXGuNvymjt pic.twitter.com/cE6chvhfFT
— Katie McKellar (@KatieMcKellar1) August 24, 2022
San Jose, California saw a 10% drop in home prices over the past few months, while Seattle saw a 7.7% drop. They were followed by San Diego's home listing prices (5.6% less) and home prices in Denver (4.2% less).
Moody’s Analytics, a risk management company, found that 183 out of the 413 largest regional housing markets in the United States are overvalued by more than 25%. For instance, Boise, Idaho’s homes are overvalued by 72%, according to the report.
“We’ve been advising for quite some time that the dynamic between interest rates, housing inventory and home prices was untenable from an affordability perspective, and at some point, something would have to give,” Andy Walden, vice president of enterprise research and strategy at Black Knight, told CNBC.
“We’re now seeing exactly that, with July’s data providing clear evidence of a significant inflection point in the market,” he added. “Further price corrections are likely on the horizon as we move into what are typically more neutral seasonal months for the housing market.”
Despite the small price drop in home listings, houses remain unaffordable for a majority of Americans, with even those making middle-class incomes being priced out of the ability to buy a home. Home prices are 14.3% higher this July than they were in July, 2021, a jump that's three times greater than the average annual price growth for homes ever recorded.
