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The current outlook of the housing sector has posed a considerable setback for homeowners, most of whom have pulled their adverts for housing in recent times.
Home prices in the United States are becoming less promising for sellers as it has fallen for the second month in a row. According to the latest Black Knight Home Price Index (HPI), median home prices fell 0.98% in August, only marginally better than July’s upwardly revised 1.05% monthly decline.
The current decline being experienced is a very positive detour for buyers looking for new homes at this time as they get to pay less. With a reduced interest rate during the pandemic years, the prices of houses hitting the market skyrocketed, and with the advent of higher interest rate thresholds at this time, the reverse trend is what is being observed.
“The Black Knight HPI for August marked the second consecutive month that prices pulled back at the national level, with the median home price now 2% off of its June peak,” said Ben Graboske, Black Knight Data & Analytics President. “Only marginally better than July’s revised 1.05% monthly decline, home prices were down an additional 0.98% in August. Either one of them would have been the largest single-month price decline since January 2009 – together they represent two straight months of significant pullbacks after more than two years of record-breaking growth.”
According to Graboske, “the only months with materially higher single-month price declines than we’ve seen in July and August were in the winter of 2008, following the Lehman Brothers bankruptcy and subsequent financial crisis.”
The current outlook of the housing sector has posed a considerable setback for homeowners, most of whom have pulled their adverts for housing in recent times. The disincentive in pricing has further dampened their resolve and many are waiting out the current dampened outlook to see if the situation will improve.
Home Prices in America: Better Days Ahead?
The metrics shared by the Black Knight data show surging 30-year rates have pushed home affordability to its worst point in 38 years, easily surpassing June’s – at the time – record-setting 34.3% payment-to-income ratio.
The economic conditions that pushed the mortgage industry still have some significant headwinds ahead. While achieving a balance in price growth and affordability is a difficult thing to achieve, healthy growth in new house developments will emanate when the government’s policies support the market.
At this time, it is yet unclear whether the US Federal Reserve will keep up with its interest rate hikes as the inflation level is still way above what it considers as the normal range between 2-4%. Should the rates keep increasing, the chances remain that the trends in the real estate industry will become more beneficial to the buyers as they are the least on the receiving end.