There is a shift happening in the housing market.
After more than a year of soaring demand, exploding home prices and increasing real estate sales, the market finally seems to be cooling off.
“The housing market isn’t crashing, but it is experiencing a hangover as it comes down from an unsustainable high,” said Taylor Marr, Redfin deputy chief economist.
Mortgage rates have increased more than two and a half percentage points this year. And the higher costs of financing a home have changed the calculations for many would-be homebuyers. As a result, year-over-year home sales have been dropping in recent months.
In a Fannie Mae survey on homebuyer sentiment, a record 79% of respondents said it’s a bad time to buy a home.
“While a lot of home sellers are already dropping their prices, more homeowners will likely decide to stay put now that the mortgage rate on a new home is significantly higher than their current one,” said Marr.