What did the data show?
Today’s S&P CoreLogic Case Shiller Index spotlights shifting dynamics in a housing market landscape feeling the pressure of rising mortgage rates in April. The month saw rates crest the 5.0% threshold for the first time since April 2010, driving the cost of borrowing over 50% higher than the prior year. For buyers, the higher costs led to smaller budgets and resulted in fewer transactions. However, the small number of homes for sale kept the pressure on prices, driving them 20.4% higher compared with a year ago. The 10- and 20-city indices advanced by 19.7% and 21.2%, respectively. Nine of 20 cities in the index recorded higher yearly advances during the month, with Sun Belt metros continuing to lead the way.
What does it mean for homebuyers, sellers, and the housing market?
With the index looking at real estate markets in the rearview mirror, the fast-paced changes of the last two months are partly obscured. Mortgage rates, which averaged 5.1% in the last week of April, advanced near 6.0% in June, pushing the typical monthly payment to $800 higher than in 2021. In addition, spurred by record-high asking prices and the desire to move beyond pandemic constraints, growing numbers of homeowners are selling their homes. These changes are resulting in cooling demand matched by growing inventory, a welcome downshifts in competitive conditions for housing markets that seemed stuck in the fast lane for two years. Homes are spending more time on the market waiting for an offer and the share of homes with price cuts is rising. For buyers and sellers, the road ahead will require more flexibility in pricing, brushing up on negotiation skills, and acknowledging that market conditions today are different than even six months ago.
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