As fears of inflation are affecting the entire United States economy, one sector that’s taking on the brunt of the damage is the housing market. While house prices are still overall higher than they were this time last year, since June, they have been on a steady downturn due to both the aforementioned inflation fears and the rising rate of mortgages.
“The slowdown was broad-based among the top 50 markets at the metro level, with some areas experiencing even more pronounced cooling,” said Ben Graboske, president of mortgage software, data and analytics firm Black Knight. “In fact, 25% of major US markets saw growth slow by three percentage points in June, with four decelerating by four or more points in that month alone.”
Interestingly, some of the biggest drop-offs in house values have occurred where they were previously at their highest, in territories like Denver and San Francisco. Currently, the supply of available houses is catching up to the overall demand, hence the drop in prices.
This is the fastest housing market collapse in modern history (bottom pane, rate of change).
The CEO of the National Association of Homebuilders says we are already in a housing recession. Which means ~18% of GDP is now at risk:https://t.co/3098wEgD0A pic.twitter.com/1Kianrmn50
— Mac10 (@SuburbanDrone) July 31, 2022
“With a national shortage of more than 700,000 listings, it would take more than a year of such record increases for inventory levels to fully normalize,” said Graboske.