Is the Housing Market Cooling Down?
Summary from the AllSides News Team
After two years of soaring home prices fueled by the COVID-19 pandemic, economists are saying that the housing market is starting to cool off.
Many factors such as lack of inventory, low interest rates and work location flexibility have attributed to the red-hot housing market. With the Federal Reserve raising its benchmark interest rate by 0.75 basis points, more mortgage rates are expected to come. According to Freddie Mac, the average interest rate on a 30-year fixed-rate mortgage climbed to 5.78% for the week ending June 16 – the highest level recorded since 2008. With home sales and overall consumer demand dropping, combined with an increase of houses being placed on the market, some experts are predicting that prices will start to simmer down.
Many experts from across the spectrum emphasized that the current housing crisis won't be "nearly as rough" as the housing crash that preceded the Great Recession. Many voices see this shift as a "much-needed rebalancing" from the current unstable and unpredictable market conditions, which should ultimately "benefit first-time buyers." Conversely, some conservative voices highlighted how the lack of optimism among home builders "reflects high inflation" and that the federal government should take action to "reduce its subsidies of the housing market."
Featured Coverage of this Story
From the Center
Here’s why this housing downturn is nothing like the last one
As quickly as mortgage rates are rising, the once red-hot housing market is cooling off. Home prices are still historically high, but there is concern now that they will ease up as well.
All of this has people asking: Is today’s housing market in the same predicament that it was over a decade ago, when the 2007-08 crash caused the Great Recession?
The short answer is: no. America’s housing market is in far better health today. That’s thanks, in part, to new lending regulations that resulted from that meltdown. Those...
From the Right
Home Builders Have Trouble Selling Properties As Mortgage Rates Rise, Prices Stay Elevated
Sentiment among home builders is plummeting as Americans’ demand for properties begins to slow, according to a Wednesday report.
The National Association of Home Builders and Wells Fargo’s Housing Market Index fell by two points to 67 in June, reaching its lowest level since June 2020 in its sixth consecutive month of declines. A value over 50 indicates that more builders see conditions as good rather than bad.
The drop in optimism reflects high inflation and lackluster economic activity. Material costs for residential construction are 19% greater year-over-year, while mortgage rates are soaring to their highest levels since 2008 —...
From the Left
5 signs the housing market is starting to slow down
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,...
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