(NEXSTAR) — After U.S. inflation cooled more than expected last month, you may be wondering whether or not the housing market is cooling off. The answer is yes — but with an asterisk.
The median sale price for a home in June 2022 was $428,400, an 11.2% increase since the same time last year. Even though this is a double-digit increase in prices, it’s also the smallest year-over-year increase “in nearly two years,” Redfin market analyst Tim Ellis says.
Data indicates that while U.S. home prices decreased 0.4% from June to July, other factors are still impacting home affordability. Even though home prices remain high, Ellis says the market is balancing out due to a variety of factors, including higher mortgage rates and decreased demand.
Redfin data shows the supply of U.S. homes for sale increased in June by 2%, which was the first year-over-year increase since July 2019. Meanwhile, home sales plummeted 16% year-over-year in June. That’s the largest drop since May 2020, according to Ellis.
“The market is a mixed bag for buyers,” Ellis said. “They’re seeing higher monthly housing payments than earlier this year due to comparatively high mortgage rates but facing less competition for homes, which often allows them to make less risky offers that include protections like inspection and appraisal contingencies.”
Several major U.S. metros are already seeing slowing real estate markets.
A recent Redfin study showed the top 10 real estate markets that are cooling the fastest include Seattle; Denver; Boise, Idaho, and Tacoma, Washington. Additionally, several California cities made the list, including San Jose (No. 1), Sacramento (No. 2), and Oakland (No. 3), among others.
Moreover, homes for sale are staying on the market much longer than they were last year, data shows. In July, about 61.2% of for-sale homes were on the market for at least a month — that’s 54.4% higher than July of last year.
“The country’s economic woes have already cooled the housing market, and they’re likely to continue dampening demand,” said Redfin Chief Economist Daryl Fairweather.
So how much have mortgage payments gone up? While that number will vary, June reporting by the National Association of Realtors shows Americans who purchase median-priced single-family homes (with a 10% down payment) are paying around $800 more per month than in January.
Buying vs. renting
Even though renting is still more affordable than buying, it’s still much more expensive than just a few years ago.
While increases seem to be slowing, rates haven’t decreased significantly. The median rent price across the United States’ 50 largest metro areas is $1,876, which Realtor says is a new record for the 16th consecutive month. Median rent for studio apartments is $1,544, and $1,738 and $2,104 for one-bedroom and two-bedroom apartments, respectively.
Overall, rent grew by 14.1% since June 2021, per Realtor data. While data shows rent growth is slowing, current rates are still 23.9% higher than 2020 and 27.6% higher than 2019.