Data out Wednesday shows existing home sales in the U.S. plunged 7.7% in November from October to the lowest level in 2½ years. Recent data for single-family homebuilding and permits, which fell last month as well, are also at levels not seen since they crashed early in the pandemic.
Those braving the housing market have spent much of the year adjusting and readjusting to higher mortgage interest rates.
Maru Gonzalez and her husband kicked off 2022 committed to buying their first home in North Carolina’s Raleigh-Durham area, where prices skyrocketed at the start of the pandemic.
“It was utter chaos,” Gonzalez said. “We would look through the Zillow search history, and our stomachs would turn.”
They’d see houses that had cost hundreds of thousands of dollars less just two years earlier.
“And now they’re wanting me to pay an additional $50,000 to 60,000 on an already overvalued house,” she said. “It just seemed absurd to me. And it was absurd.”
Four offers later, Gonzalez and her husband finally closed on a house in March. They paid just over $600,000 — for a home listed at $550,000.
Fast forward nine months, though, and we’re in a very different housing market, said Igor Popov, chief economist at the online rental marketplace Apartment List.
“It’s like the housing market stepped out of a sauna in 2021 into a cold, air-conditioned room in 2022,” he said. “It felt good at first, but now it’s really cold.”
Across the board, key indicators support the idea of a cooldown, according to Rob Dietz, chief economist at the National Association of Home Builders.
“Activity is down about a third from a year ago. And that includes things like single-family construction, existing home sales and mortgage applications.”
If you don’t happen to follow every new housing data point, you might think home prices would be falling by now. But nationally, they’re still rising year over year, said Barbara Fields, a vice president at consulting firm Abt Associates.
“This continues to put tremendous pressure on the lowest-income families in our communities,” she said.
Falling activity — coupled with rising prices — is far from normal, Fields added. But she said it’s hard to say what is normal in this market.
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