The pandemic construction boom has officially ended. Home price appreciation has stalled, with Western markets leading the nation in decline, according to a new report.
“Pandemic boom markets cool faster,” a report by First American examined affordability as part of its real house price index and found that doubling mortgage rates severely affected spending potential. of home buyers.
In August, real house prices (adjusted for inflation) increased by 49% compared to the previous year. But between July and August, real house prices fell 1.8%, according to the company.
Expect home price appreciation “to drop further,” said Mark Fleming, First American chief economist and author of the report, “as the early 2022 hot seller market turns in favor of buyers.”
The 30-year fixed rate averaged 7.32% as of Friday, according to Mortgage News Daily.
Fleming told MarketWatch in an interview that home price appreciation could drop to a low figure, but pointed out that home prices had risen so much that they weren’t exactly collapsing.
“Prices are falling, appreciation is moderating in the real estate market more generally. We’re still selling 4.7 million homes a year, the typical amount of time being 19 days to sell a home – it doesn’t sound like a recession, ”Fleming said.
Looking at home price appreciation in the country’s top 50 markets, Fleming found that many in the West are among those who have seen the fastest percentage point falls in home price appreciation.
“The appreciation of house prices has slowed in all 50 markets we follow, but the deceleration is generally more dramatic in the areas that have experienced the highest appreciation spikes,” Fleming noted in the report.
The market with the strongest deceleration was Sacramento, where the appreciation of house prices peaked in July 2021 at 23.5% and slowed to 4.6% in August.
San Francisco recorded the slowest annual rate of appreciation in August, at 1.1%, which fell significantly from its peak of 17.6% in July 2021.
“Not surprisingly, if you look at the list, most of the markets that are decelerating the fastest are our western markets,” Fleming said.
Conversely, many markets in Florida, such as Miami, are still holding up quite well.
Markets like Tampa and Miami benefit from strong interest from overseas buyers, Fleming explained.
“Buying real estate in the US is seen as a safe place to park your money and you can even spend some time there,” he said.
Taking into account the migration from other states such as New York, this results in strong demand for the Florida market.
Real estate markets in the Midwest are also interesting to watch, Fleming said, given the way they are slowly, slowly, but steadily appreciating.
Do you have thoughts on the real estate market? Write to MarketWatch reporter Aarthi Swaminathan at [email protected]