High interest rates and low inventory cause housing market to stall.

Is America’s Housing Market in Trouble?

Recent data shows America’s residential housing market is in trouble. The Economist believes that the situation in the U.S. housing market suggests that a recession is on the way. Many other economists believe the housing market is already in a recession.

What the Data Shows

• U.S. home prices were down in March “3.3% compared to last year, selling for a median price of $400,698. On average, the number of homes sold was down 19.5% year over year.”
• The number of homes for sale was up 7.1% year-over-year and the number of newly listed homes was down 22.5%.
• Houses are staying on the market longer — 44 days for homes sold in March — up 23 days year-over-year.
• Privately-owned housing units authorized by “building permits in March were at a seasonally adjusted annual rate of 1,413,000. This is 8.8 percent below the revised February rate of 1,550,000 and is 24.8 percent below the March 2022 rate of 1,879,000.”
• Privately-owned housing starts in March were at a seasonally adjusted “annual rate of 1,420,000 … 17.2 percent below the March 2022 rate of 1,716,000.”

A housing market collapse similar to the Great Recession is not likely. The majority of mortgages are fixed rate and are locked in at 5% interest or below, and the credit of homeowners is much stronger than that of homeowners in 2008.

Foreclosure Activity and Homebuyer Remorse

• In January 2023, there were a “total of 31,557 U.S. properties with foreclosure filings – default notices, scheduled auctions or bank repossessions – up 36 percent from a year ago.”
• Approximately 65,000 home purchase agreements fell through in December 2022.

A Tale of Two Housing Markets

• Cities like Phoenix, Seattle, San Jose, and San Francisco all saw home prices decline by double digits in 2022.
• The top five areas with the largest price increases in 2022 were Florida (15.2%), North Carolina (13.4%), South Carolina (12.9%), Hawaii (12.8%), and Maine (12.2%).

The Impact of the Biden Administration Rule

• A new Biden administration rule will force people with good credit and a large down payment for a home to subsidize the mortgage and fees paid by people with poor credit and a low down payment.
• State treasurers and finance officials from 27 states urged the Biden administration to rescind the rule, which took effect on May 1.

What’s Next for the Housing Market?

It will depend on several factors, including what the Federal Reserve does with interest rates during its May meeting. But, if we continue to see a mass migration of Americans fleeing blue states such as California, New York, and Illinois, we will see a tale of two housing markets – collapsing markets in states people leave and white-hot markets in the states to which people move.

Jim Nelles is a Navy veteran and supply chain consultant based in Chicago. His articles have appeared in The Washington Examiner, Newsweek, Foxnews.com, and The Daily Wire. He has served as a chief procurement officer, chief supply chain officer, and chief operations officer for multiple companies.

The views expressed in this piece are those of the author and do not necessarily represent those of The Daily Wire.