The housing market may be poised for a cool-down, as June marked the third consecutive month of decline for existing home sales, the pace of sales have slowed to an eight-month low, and inventory is starting to expand.
As these pressures ease, home price growth has been slowing down, with the smallest year-over-year gain since early 2017 in May 2018, reports the Federal Housing Finance Agency. Homebuyer sentiment, another market indicator, recorded the lowest number of Americans who think now is a good time to buy a home since 2008 in July, according to a University of Michigan survey. Lawrence Yun, chief economist for the National Association of Realtors tells Bloomberg, “Affordability is becoming a major headache for homebuyers," and Ed Stansfield, chief property economist at London-based Capital Economics Ltd. adds, "People are saying: Let’s just bide our time, there’s no great rush ... we’re now [in] a period in which prices move more or less sideways, or increase no more quickly than growth in incomes, over the next few years.”
The U.S. housing market -- particularly in cutthroat areas like Seattle, Silicon Valley and Austin, Texas -- appears to be headed for the broadest slowdown in years. Buyers are getting squeezed by rising mortgage rates and by prices climbing about twice as fast as incomes, and there’s only so far they can stretch. “This could be the very beginning of a turning point,” said Robert Shiller, a Nobel Prize-winning economist who is famed for warning of the dot-com and housing bubbles, in an interview. He stressed that he isn’t ready to make that call yet.