The Pandemic shut down most of the US for a short period and then slowly came back online which made the Feds lower interest rates to jump start the economy. What they didn’t expect was the rush of Americans buying up all the homes. With interest rates as low as we will probably never see again (at least in my lifetime) existing home sales exploded. Many of which went for 50k over asking price with bidding wars driving up some homes even further. Something like the Wild West of real-estate, with a decade of appreciation in a matter of 18 months.
Now with the Feds ramping up interest rates to tamp down on soaring inflation, Existing and new home sales are leveling off. “The U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006,’” Len Kiefer, deputy chief economist at Freddie Mac, said earlier this month. Nearly half of homes for sale in Provo, Utah — another hot destination located 45 miles from Salt Lake City — had prices drop in May, according to Redfin. About 46% of homes in Salt Lake and 44.2% of homes in Boise that were for sale also had their prices slashed. Inventory is climbing, too. Realtor.com data from June noted a 18.7% increase in the number of new homes available for buyers — the “fastest yearly pace of all time,” the company said. The biggest jumps in listings were in markets like Raleigh, Nashville, and Charlotte, on a month-over-month basis.
At the time of this publication all the major home builders are down at least 15% or more in June. Dream Finder Homes DFH-39%, KB homes KBH-17.3%, Tri Pointe Homes TPH-20.5%, Meritage Homes MTH-15%. With another round of Interest rate hikes expected in July, most are expecting at least a 50 base point hike but don’t be surprised to see a 75-point hike.