The National Association of Realtors (NAR), in its ongoing analysis of home sales statistics, believes that prices will continue to rise during the third quarter, but that uncertainty over elections could be a factor during the second half of the year.
However, NAR’s report noted that in July, a typically lackluster month, home prices rose by about nine percent, and days on market decreased significantly, perhaps signaling a strong start for the third quarter.
National statistics don’t necessarily tell the whole story, however. In addition, what will happen in the fourth quarter is, at this point, a bit more difficult to predict. Assessments about how home prices and real estate will end the year differ from one part of the country to another.
Looking Ahead
In 381 of 500 markets that were tracked, homes stayed on the market for fewer days in July 2018 than the median time on market the previous year, even in the highest price markets, typically a sign that demand is still outpacing supply.
Dallas-Fort Worth area mortgage lenders report a noticeable slowdown over the past several months, and the inventory of homes on the market has grown. But another Texas town, Midland, ranked as the nation’s hottest market for the second month in a row in July, based on continued high demand and the speed at which homes have been selling.
The list of fast-moving markets, compiled by by Realtor.com, also places Columbus, Ohio, Boston and Fort Wayne, Ind., at the top; Dallas-Fort Worth, interestingly, ranked 17th of 20 hot markets in the Realtor.com survey.
Potential Benefits
Some housing analysts note that even slight slowdowns in select markets, coupled with rising mortgage rates, may signal a wider downturn in sales nationally, adding that it is not entirely unexpected. Many real estate and mortgage professionals, however, view any potential “adjustment” as a good thing, with the explanation that the double-digit appreciation is unsustainable over the long term.
Prevailing wisdom is to take a wait and see approach leading up to midterm elections. Pollsters and pundits have widely variant opinions and, to date, trends are not sufficiently clear. In addition, the housing industry is seemingly healthy at this point and, barring unexpected major interest rate increases, demand for housing is likely to remain strong.
As one researcher at Texas A&M University explains, even a modest slowdown will likely only bring the real estate market down to 2016 levels and, in retrospect, that was a very good year! Other analysts are more positive, saying that an expected slowdown is positive and will prevent “a new bubble.”
As always, contact your trusted real estate and mortgage professionals to discuss the current situation in your local market.
Last week’s economic readings included reports on home prices, new and pending home sales and remarks released by the Federal Open Market Committee of the Federal Reserve. Weekly readings on average mortgage rates and first-time jobless claims were also released.
