When will things go back to “normal?” That was a burning question on practically every real estate agent and pundit’s minds throughout the pandemic. After all, the past year and a half of feverish market activity, razor-thin supply and record-low mortgage rates weren’t going to last forever.
Fast forward to the 2022 summer market, and experts at realtor.com® are expecting a significant rebalancing as the housing market develops what’s being called a “new normal” in their latest Housing Trend analysis.
As of June 9, the report shows that the median listing price increased by nearly 16%. While the double-digit gain maintains the general upward trend of price tags, experts note that they’ve started seeing signs of decelerating gains in recent months amid rising inventory and softening demand.
The latter has largely been the result of a trio of factors—prices, mortgage rates and inflation—that have exacerbated the housing affordability gap that has been brewing in the housing market for the past couple of years.
The report indicates that the slowdown in price growth is likely to continue for the rest of the year.
New listings also dipped by 6% during the week ending July 9 compared to the same period last year. While that breaks from several weeks that saw an uptick in listings hitting the market—8% and 5% jumps in the prior two weeks, respectively—experts attributed the lull to the holiday weekend, and expect it to normalize in the coming weeks.
The uptick in new listings has been a boon for housing supply levels lately as active inventory climbed by 28% that week, according to the report, which also showed that the number of days a listing spent on the market dropped by a day.
- The median listing price advanced by 15.9% over last year.
- New listings—a measure of sellers putting homes up for sale—declined 6% from one year ago.
- Active inventory continued to grow, rising 28% above one year ago.
- Homes spent one day less on the market than this time last year.
“This year’s summer housing markets are feeling the heat of record-high home prices on top of scorching inflation at a 40-year high,” said George Ratiu, senior economist & manager of economic research for realtor.com®. “As households pay much more for cars, clothing, food, gasoline and services, there are fewer dollars left over from each paycheck at a time when housing affordability is a growing challenge.
“For a household with a $75,000 income, only 23% of homes on the market are affordable, down from 50% of inventory in 2018. While these trends are resulting in a cooler summer home-buying season than usual, the road ahead points toward a promising shift, away from 2021’s severe undersupply and win-at-all-costs competition. As the Fed continues to fight inflation, borrowing costs will keep rising, cooling demand at a time when we’re seeing more homes for sale. In turn, prices will continue to adjust to a new equilibrium.”