Over the last few months, the housing market was at an all time high between high demand, surging prices and low interest rates.
However, recent data revealed that the market may actually be in a “recession” from where it once was.
“We’re witnessing a housing recession in terms of declining home sales and home building,” said Lawerence Yun, chief economist for the National Association of Realtors.
The slowdown in market sales will hurt the economy but it could also help those people who are searching for a home who are willing to pay the high prices.
According to Barrons, ever since July, previous homes were sold at an annual rate of 4.81 billion which marked the lowest rate since November of 2015.
New home sales also have found themselves in a decline into their their lowest level in six years.
“It’s not a recession in home prices. Inventory remains tight and prices continue to rise nationally with nearly 40% of homes still commanding the full list price.”
Both home builders and home sellers are experiencing the slowdown which explains why the prices are still up even with the start of this “recession.”
The rise and fall of the housing market also goes along with supply and demand. Even though the demand for homes has dropped recently, the supply count is still very tight.
The lack of supplies is partly due to the lack of construction that has occurred over the last decade and even since the 2008 crash.
The demand for buying new homes have continued to drop since January, but the mortgage rates have still continuously faced a rise from 3.3% at the beginning of the year to 6% now.
The high mortgage rates have made it harder for those looking to buy a home to afford them.
The demographics also play in part with the supply and demand of the housing market as well.
Even while there is a recession within the market, there are still more people searching for a home than there are actual homes to buy.
“We are seeing more inventory come into the market, but it’s not enough to meet the buyer demand,” said Jessica Lautz, vice president of demographics and behavioral insights at NAR.
Given the constant highs and lows of the market, buyers may want to be patient before they decide if they are ready to commit to buying a home.
For first-time homebuyers, they also have to consider the price of rent because that is consistently increasing as well.
“Even though borrowing costs have risen, it still in the long run may be worth buying a home given that what’s driving inflation right now is rising rental prices. It still may be an opportunity to get out of the pressure of rents,” said Jeffrey Roach, chief economist at LPL Financial, a national broker-dealer.
Nikki Indelicato is a Contributing Reporter at The National Digest based in New York. You can reach her at firstname.lastname@example.org.