The U.S. Census Bureau delivered mixed news about April’s housing market on Wednesday.
Housing starts were down a bit from March but were up year over year, though these housing numbers are notoriously volatile and subject to revision.
But for those who are currently looking to buy — either now or in the near future — there are some signs that the housing market may be starting to cool. At least a little.
So, there’s good news and bad news if you’ve been wanting to buy a house: The bad news, of course, is that mortgage rates are up, meaning “mortgage payments are going to be higher. They’re up more than 40% now from what they were last year for the median-priced home,” said Daryl Fairweather, chief economist at Redfin.
But the sort of good news about rates being up? Demand is starting to fall, Fairweather said. “We are seeing more homes having price drops. We’ve also noticed a drop in competition for two months now.”
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Now, to be clear, the market is still nuts. Redfin says there are still bidding wars for more than half of homes, and prices are still at record highs and rising. But they’re not rising quite as fast as they have been.
“People should not anticipate another double-digit price appreciation. Those days are over,” said Lawrence Yun, chief economist at the National Association of Realtors. “So we may return to more normal price appreciation of 4%, 5% a year.”
The experience of buying a home is also starting to return to normal, Yun said.
“Rather than facing 15 or 20 other buyers for the same property, now maybe people can take more leisure pace. View five homes.After contemplating over the weekend, make an offer,” he said.
“We’re really approaching this inflection point where we’re going to start to see the market shifting a little bit,” said Nicole Bachaud at Zillow.
Another sign of that is that inventory is starting to pick up, she said.
“That will likely continue throughout much of the next year or two, as we have construction starts and permits up, as we have more existing homeowners listing their homes for sale on the market,” said Bachaud.
But, she added, it’s still going to be a while before inventory and prices really level out.