The real estate market has largely been frozen since the mortgage interest rates have risen a few years ago, but the latest indicators have pointed out the possibility of an extended price replacement.
The latest Fall-Hiller house price report showed a monthly decline of 0.3% in the 20-city index in April, which steeper than the downward drop of 0.2%.
In a note on Tuesday, Thomas Ryan, economist in North America at Capital Economics, warned that the decline in the back on a “deeper correction” has a “deeper correction”.
“After the decline in March, the further 0.3% m/m decline in real estate prices in April increased the risk that prices will occur in a continued downturn, since the market finally fell under the weight of almost 7% mortgage interest,” he added.
Ryan noticed at a three -month annual basis, Ryan noticed. And while prices have increased compared to the previous year, it is still the slowest pace since August 2023
The Fall-Hiller data is not the only red flag because the FHFA price index showed a monthly decline of 0.4%.
“The existing market for houses clearly loses dynamics, since demand remains anemic due to the childish high credit costs, while more people put their home for sale and the sellers force to adapt their price expectations,” wrote Ryan.
Earlier data also coordinates with a downward trend. The median sales price of an existing house has dropped seasonally for five consecutive months. This is the number of houses offered for sale, which are back in the pre-Pandemic level.
Of course, lower prices also make houses more attractive, potentially in demand and in demand and Represent relief For younger Americans who want to buy but were evaluated from the market price.
However, economists from Citi Research marked the ongoing headwind and attributed the drop in the price to high mortgage interest, increased uncertainties, the softening of consumer demand and a weak labor market.
In addition, the slowdown of activity in the apartment sector is an early sign that the underlying demand is weakening this year, said Citi recently.
“While the prices could still fluctuate every month, the consistent weakening of the median sales prices indicate that the trend will probably continue more stable measures for new real estate prices such as the Shiller index case,” said the economists.
Capital Economics said there are still a few reasons to believe that a longer downturn can be avoided. Ryan pointed out that, despite some expansion, this supply has remained relatively narrow overall.
In the meantime, the mortgage market is also healthy and is reinforced by more than a decade of stricter lending standards that have been initiated after the great financial crash. In addition, the persistent resilience on the labor market should prevent forced sale on the real estate market, he added.
“Everything that is said that the weakness of the latest price data means that we have to take the prospect of a long time of the real estate award seriously, which we will consider for our upcoming US apartment prospects,” said Ryan.
