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The U.S. housing market remains in a deep sales slump, but the worst declines may be over when it comes to home prices.
While home sales have fallen 22.3 percent through the first seven months of the year versus the same stretch in 2022, prices are being propped up by buyers competing for a near-record low inventory of properties on the market.
The national median sales price rose to $406,700 last month, marking its first annual increase since January and the second month in a row that it’s been above $400,000, the National Association of Realtors said Tuesday.
Home prices didn’t start falling on an annual basis until February, and even then the decline was modest, with the steepest drop 3 percent in May. That five-month streak of annual drops ended last month, when the median sales price rose 1.9 percent versus July last year. It’s now a eye-popping 45 percent higher than it was in July 2019.
So, where do prices go from here? Homebuyers hoping for a big drop may be disappointed.
“At least when it comes to home prices, it looks like the housing recession is already over,” said Lawrence Yun, the NAR’s chief economist, adding that he sees a greater chance of an increase in prices versus a decline in the coming months.
Mike Simonsen, president of Altos Research, which tracks data on the U.S. residential real estate market, echoed that outlook.
“For people who are on the sidelines there’s nothing in the data yet that suggests home prices are falling further,” Simonsen said.
A shortage of homes for sale has kept the market competitive, driving bidding wars in many places, especially for the most affordable homes. About 35 percent of homes sold in July fetched more than their list price, according to the NAR. That’s in line with sales data for April through June.
While still low by historical standards, the inventory of homes on the market has been ticking higher as the average rate on a 30-year mortgage has risen to just above 7 percent, discouraging more would-be homebuyers.
