Home prices in pandemic hotspots cooled last week despite mortgage rates dropping to 5.3% on a 30-year loan. This 5.3% drop was the biggest one-week decline since 2008, according to the Mortgage Bankers Association (MBA).
Proportion of Active Listings with Lower Prices Increasing
According to Zillow, the proportion of active real estate listings with lower prices has increased in all 50 of the largest US metros.
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Overall, 11.5% of homes in the country’s largest metros have seen price cuts. Pandemic hotspots are seeing even more of those cuts. Take a look:
Softening Housing Markets
Metro Area Share of Price Cuts
Sacramento CA 14.9%
Salt Lake City UT 15.5%
Phoenix AZ 13.3%
Las Vegas NV 13.7%
Riverside CA 12.6%
San Antonio TX 12.3%
Austin TX 9.6%
Nashville TN 12.5%
According to Edward Seiler, associate vice president of housing economics at the MBA, “Inflationary pressures and rates above 5% are both headwinds for the housing market in the coming months.”
Investors Taking Wait & See Stance
According to Zillow, “Investors are pricing in more risk (attributed to) an economic slowdown and a potential recession, which may slow the pace of future interest rate hikes at the Federal Reserve.”
Even though mortgage rates declined during the last two weeks, the MBA indicated that there was no corresponding uptick in mortgage activity. Just the opposite, in fact. The MBA reported that purchase applications were down last week as shoppers were dealing with affordability challenges and scant home inventory.
Thanks to Zillow and Bloomberg.
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