The housing market remains incredibly competitive compared to pre-pandemic times, but buyers have begun to pull back, slightly cooling the market. Both the rate of price growth and mortgage applications have decreased. One economist told Realtor.com that the market is moving past the apex now. By 2021 housing market standards, competition has relaxed, but by any other standards, it’s still incredibly hot: Listing prices remain 12% higher than one year ago. A mix of buyers being priced out, a shortage of properties, fears of a bubble, and a return to “normal” life are cooling the market.
This could result in fewer bidding wars and more reasonable offers over the asking price. And it might just provide the opening that many weary buyers need.
“Buyers may be taking a break from the housing market, “says Realtor.com® Chief Economist Danielle Hale. “There have been signs that the momentum in the housing market is slowing. The competition might not seem as intense as it’s been in the last few months.”
In the week ending June 19, median home list prices were up 12.2% over the same month a year ago, according to the most recent Realtor.com data. While this stunning, year-over-year increase may not immediately invoke the idea of a market cooling off, it’s less than the 17.2% annual jump in prices in April, indicating slower price growth.
To be clear: Some of April’s rise was due to the comparison to a year earlier. April 2020 was the beginning of COVID-19, when local restrictions and general fear over the virus hampered real estate markets. But that’s not the whole story as in January of this year, when prices were up 15.4% compared with January 2020, which was well before the pandemic.
Meanwhile, fewer buyers are getting mortgages to buy homes.
The number of purchase mortgages dropped 14.2% year over year in the week ending June 18, according to a survey of lenders issued by the Mortgage Bankers Association. It also fell compared with four weeks ago. (Refinances, while also down, were not reflected in this percentage.)
While some of this is because last year’s housing market was in flux as COVID-19 stalled sales, it could also be an indication of a general overall softening.
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