Home prices are on the rise, but they have slowed since the summer peak

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It’s no secret that housing has become unaffordable since the start of the year. We can largely thank the low inventory for this coupled with intense demand from buyers.

In September, US home prices rose 19.5% year-on-year, according to the S&P CoreLogic Case-Shiller National Home Price Index. This kind of gain is clearly substantial.

But there is good news buried in that number. September’s annual gain was actually lower than home price gains in August, which were measured at 19.8% from the previous August. In fact, September is the first month that has seen a decrease in annual house price increases since May 2020.

Any positive news for home buyers?

Many buyers have struggled to break into the housing market this year. With home prices so high, first-time buyers in particular have struggled to be affordable, even though mortgage rates have remained at attractive levels since the start of the year.

The slightly lower annual gain in home prices in September could be an indication of a continuing trend – home values ​​could fall month after month, so that at some point in 2022 they will be much more affordable than they are. are not today. But it is not guaranteed.

The factor most likely to influence home prices is inventory. If more homes hit the market in the next few months, there will be more supply to meet buyer demand. This could lead to fewer bidding wars across the housing market as a whole, which could help lower house prices.

It remains to be seen whether more sellers will advertise their homes in 2022. A big reason many have abstained stems from concerns about the U.S. economy and the pandemic. While the former is now in much better shape than it was a year ago, the pandemic is unfortunately still raging. In fact, the recent emergence of the omicron variant could prompt homeowners looking to sign up in early 2022 to rethink those plans.

Preparing to buy a home in 2022

Even though house prices drop steadily on a monthly basis, they are currently at very high levels. A modest decrease may not do much to help buyers on a budget.

However, if you are hoping to buy a home in the short term, there are steps you can take to prepare. First, aim to make a 20% down payment to avoid private mortgage insurance. Next, increase your credit score so that you are in the best position to get an affordable mortgage interest rate.

Finally, get a pre-approval letter to bring along with your home search. This could give you an edge over other buyers if you have competition for a home you want to bid on.

The fact that the rise in home prices has slowed down somewhat is a good thing for buyers. Let’s see if this trend continues until 2022 and to what extent it impacts those looking to buy their own home.


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