Three new data reports are pointing to evidence that housing is shifting from a seller’s market to a buyer’s market.
The new
S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.8 percent annual gain in August, down from six percent in the previous month. This marks the first time in 12 months that annualized gains fell below the six percent level. The 10-City Composite annual increase was 5.1 percent, down from 5.5 percent in the previous month, while the 20-City Composite saw a 5.5 percent year-over-year gain, down from 5.9 percent in the previous month.
Before the seasonal adjustment, the National Index posted a month-over-month gain of 0.2 percent in August while both the 10-City and 20-City Composites saw no gains for the month. After the seasonal adjustment, the National Index recorded a 0.6 percent month-over-month increase in August while the 10-City Composite and the 20-City Composite both posted 0.1 percent month-over-month increases. In August, 12 of 20 cities reported increases before the seasonal adjustment, while 17 of 20 cities saw increases after the seasonal adjustment.
“Following reports that home sales are flat to down, price gains are beginning to moderate,” said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Comparing prices to their levels a year earlier, 14 of the 20 cities, the National Index plus the 10-city and 20-city Composite Indices all show slower price growth. The seasonally adjusted monthly data show that 10 cities experienced declining prices. Other housing data tell a similar story: prices and sales of new single-family homes are weakening, housing starts are mixed and residential fixed investment is down in the last three quarters.”
But Blitzer warned that not every buyer can take advantage of this trend.
“Rising prices may be pricing some potential home buyers out of the market, especially when combined with mortgage rates approaching five percent for 30-year fixed rate loans,” Blitzer said.
Separately,
Zillow issued an analysis that concluded this could be a good time for homebuying in many major markets. The Seattle-based company pointed to an increased number of listings with price cuts, projected spikes in rent appreciation and the closing window of mortgage affordability due to rising rates as the key reasons to pursue residential property.
As for the best places to go homebuying, Zillow listed Orlando, Boston, Seattle, Las Vegas, Charlotte, Columbus, Portland, Sacramento, Minneapolis and Dallas as the best metro areas for a wintertime house purchase.
"The housing market always lets up a little in the fall, when kids are back in school and the home shopping season wraps up for the holidays," said Zillow Senior Economist Aaron Terrazas. "But this fall and winter are shaping up to be more favorable for those buyers who have struggled to get into the housing market for several years amid red-hot competition. Mortgage rates are rising, but will climb much further in 2019 and early 2020. As purchase affordability deteriorates, expect rents to pick back up as some would-be buyers put their plans on ice. Renters who were thinking of buying and decided to hold off may want to take another look this winter, as a steady clip of mortgage rate increases chips away at affordability and more homes become available on the market."
In another data report,
Redfin’s Housing Demand Index increased 5.1 percent from August to 131 in September after being stuck at around 124 since May. However, Redfin explained that this increase was attributable to early-stage homebuying activity rather than offer-writing. Still, more people are looking: The number of people requesting home tours from Redfin brokers shot up by 11.2 percent from August to September, the largest monthly increase in 16 months, and the number writing offers increased by 8.1 percent.
"There are a couple of explanations for the increase in buyer activity from August to September," said Redfin Chief Economist Daryl Fairweather, who authored the report. "One is that rising mortgage rates motivated some buyers to look for a home before rates rise again. Second, inventory usually falls from August to September, but this year it rose 0.7 percent, giving buyers more homes to choose from."
But on the other hand,
Redfin’s Housing Demand Index was down 10.2 percent since last year, the eighth consecutive month of annual declines, and the numbers of buyers requesting home tours and of those writing offers were also lower from one year ago.
