Despite reaching historic highs in mortgage rates, the latest data suggests that real estate prices could face downward pressure in the coming months.
The report indicates that since October 2022, housing inventory in the United States has decreased by 2%, and the main reason for the sustained stability of real estate prices is the shortage of supply. This supply-demand imbalance has led to continued price increases, although the rise in mortgage rates has suppressed home buying demand.
Furthermore, despite an increase in new home sales in September, construction activity is not sufficient to offset the low inventory gap.
Specifically, the tightest housing supply is in the western and northeastern regions of the United States, where the number of homes for sale has decreased by 24.7% and 10.4% respectively compared to the same period last year, while the inventory in the Midwest has decreased by 4.8% and has increased in the southern region.
In the 50 largest metropolitan areas in the United States, two-thirds of the markets have seen a decrease in the number of homes on the market compared to the same period last year.
The report also shows that homeowners are reducing listing prices at an increasingly rapid rate.
According to data from listing websites, the proportion of properties with price reductions has been increasing month by month, reaching 18.9% in October, significantly higher than pre-pandemic levels. This suggests that although some areas are showing signs of price decline, this has not translated into a comprehensive decrease in home prices.
In fact, only five markets have experienced an overall decline in home prices since 2022, namely San Antonio, Texas; San Jose, California; Memphis, Tennessee; Dallas, Texas; and Miami, Florida.
On the other hand, the report also mentions data on median home prices and median price per square foot in 13 cities, including St. Louis, Missouri; Oklahoma City, Oklahoma; and Memphis, Tennessee. While the median prices and price per square foot have varied, the shares of price reductions and decreases have shown an upward trend, indicating signs of price adjustments in these areas.
