Mortgage rates increased slightly this summer, yet the price of homes seemed to continue rising in response to the high demand for homes. However, according to an article published by Yahoo! Finance, the housing boom may be winding down. Sales of new home fell 6.6% from May to June and the median home price only rose 6%, a stark drop from May’s gains reportedly in the 15-20% range.
In the article, reporter Georgia Tzanetos offers some possible reasons for the dip in demand and possible outcomes. The article indicates “Chief Investment Officer at the Bleakley Advisory Group Peter Boockvar told CNBC that ‘the moderation in home sales is likely a combination of sticker shock and the slowdown in the ability of builders to finish homes because of a variety of delays.’”
The next several months will reveal the cause behind the slowing of demand and price increases. If buyers are hesitant to purchase a home right now, it may be due to the “sticker shock” of rising home prices. These buyers may begin to search for homes again and even make a purchase if they see home prices decrease in the next few months. However, the lag in demand may be caused because, simply, “everyone who needed a home bought one…”, which would likely result in prices to continue to fall. As the remainder of the summer market plays out, real estate professionals will be watching closely anticipating what’s next for the real estate market.
Read the entire article.
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