Home prices are rebalancing after two years of record appreciation, but experts say it may take some time for them to fall from current highs. Sale prices of existing homes dropped by $10,000 in July to a median of $413,800, but prices were still up 10.8% year-over-year, according to Realtor.com. Home prices typically peak in June and fall throughout the remainder of the year, and that seasonality has just begun, though price drops are also a result of waning buyer demand forcing sellers to realign their market expectations.
Existing-home sales fell 20.2% year-over-year in July, while new-home sales fell nearly 30% in July compared with a year earlier, a trend likely to continue as rising mortgage rates price out a large share of prospective buyers.
Whether prices fall—and by how much—depends on mortgage interest rates. The higher rates go, the less money buyers have to put toward the asking price of a home. And if a recession hits and many would-be buyers lose their jobs, there will be fewer folks to bid up prices.
“There’s an expectation that prices fall immediately, but they don’t. Prices are sticky on the downside,” says national real estate appraiser Jonathan Miller. “Sellers who don’t get their price and don’t have to sell, wait.”
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