Home prices have continued to surge despite higher mortgage rates and an increase in housing supply—factors that typically put downward pressure on home prices. But the numbers still show the market is quite resilient, and costly.
In June, the national median listing price for single-family homes was $450,000, up 16.9% from the same time last year and more than 31% from June 2020, according to Realtor.com. With homes nearing half a million dollars, buyers are beginning to pull out of the market. Mortgage applications dropped to the lowest level at the end of June, marking the biggest slump in 22 years, according to the Mortgage Bankers Association (MBA).
The current change in the housing market is partly due to the economy at large and consumer sentiment. And right now, the economy is on shifting sands—on one hand, there are signs of a weakening economy as the gross domestic product (GDP) has declined for two consecutive quarters, which some economists say indicates a recession. But on the other hand, the job market and consumer spending is still strong.
The MBA hasn’t included a recession in their baseline forecast, but they say it’s a “coin flip at this point,” estimating a roughly 50% chance of the U.S. entering a recession over the next 12 months.
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