Townhouses for sale in the Upper East Side neighborhood of New York City.
Adam Jeffery | CNBC
Part of the heat is coming from home prices, although they are still higher than a year ago.
Several new reports show home price gains are narrowing and home sellers are starting to buckle after the market stalled in the spring.
Home sales have stalled since the start of the Covid-19 pandemic, with typical homes selling for just below asking price for the first time in the four weeks to June 23, according to real estate data from brokerage Redfin. That time a year ago, the typical home was selling at list price. Two years ago, it sold for about 2% above list price.
That’s not to say the housing market is crashing. Just under two-thirds of homes still sold for more than asking price last month; however, this is the lowest proportion since June 2020.
Mortgage rates remain high, with the average rate on a 30-year fixed mortgage just above 7% for the third month in a row, according to Mortgage News Daily.
The closely watched S&P Case-Shiller index showed that home prices rose 6.3% in April from April 2023. Home prices are now 47% higher than at the start of 2020, with the median sales price five times the median household income.
CNBC obtained exclusive early access to another index of home price data due out next week from ICE Mortgage Technology. Data showed that the annual growth rate of house prices fell to 4.6% in May from 5.3% in April. This is the slowest growth rate in seven months.
Supply begins to increase, causing prices to cool. According to Realtor.com, the total number of active listings is now 35% higher than this time a year ago. Looking longer term, however, even after recent growth, inventories are still down more than 30% from typical pre-pandemic levels.
“Some buyers think they can get a deal because they’ve heard the market is cold, while some sellers think every home will sell for top dollar regardless of condition,” Marije Kruythoff, a Redfin agent in Los Angeles, said in a news release. Really, everything depends on the house and the location.”
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