The American housing market is showing signs of cooling down after it was heated last year. Lower mortgage rates and the rise of remote work during the pandemic have led to an overheating housing market. Since January, home sales have started to slow down but prices remain at record highs.
Sales of existing homes fell 2.7% in April to 5.85 million, marking the third straight monthly decline of sales, according to the National Association of Realtors (NAR). High demand for homes faced with low supply and record-high prices have slowed the pace of sales.
Declining sales is a good sign in the overheated market but factors that contribute to increasing home sales still exist. Analysts cautioned against overstating the slower pace, near-record borrowing rates and millennials entering their prime home-buying years are still spurring demand. “Even with home sales declining modestly, one can describe the market as being hot”, said NAR’s chief economist.
According to CNN, 88% of homes in April were sold in less than a month.
Contrary to sales, home prices reached new highs in April. The median existing-home price rose to $341,600, the highest median price since 1999.
References:
1) Bahney, A. (2021, May 21). Home prices just smashed another record. CNN. https://www.cnn.com/2021/05/21/homes/existing-home-sales-april-feseries/index.html.
2) Friedman, N. (2021, May 21). U.S. Home Prices Push to Record High, Slowing Pace of Purchases. The Wall Street Journal. https://www.wsj.com/articles/u-s-home-prices-push-to-record-high-slowing-pace-of-purchases-11621605953.
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