Home prices are beginning to soften across the nation, and one housing expert said more pullback is yet to come.
The median home price for active listings declined to $449,000 in July, according to data from Realtor.com, down from a record high of $450,000 the month prior. That reflects an annual growth rate of 16.6%, a modest slowdown from last month’s year-over-year rate of 16.9%.
“Expect prices to continue to fall the rest of the year,” Daryl Fairweather, chief economist at Redfin, told Yahoo Finance Live (video above). “Mortgage rates are so high, homebuyers simply can’t afford their monthly payments. Monthly payments are about 40% up from last year. It’s really hard for buyers to stomach that.”
Sellers pull back from the market
Buyer hesitancy is starting to show up in the numbers.
Existing-home sales slid for the sixth consecutive month in July, according to the National Association of Realtors, to a seasonally adjusted annual rate of 4.81 million. Sales were down 5.9% from June and 20.2% from a year prior. The median existing-home sales price was down roughly $10,000 from the previous month to $403,800 in July, NAR said.
Buyers have also grown more skittish, Redfin data revealed, as roughly 63,000 home-purchase agreements fell through in July, equal to 16.4% of homes that went under contract last month.
With fewer buyers willing to pay more than the asking price for a home, some sellers are pulling their listings from the market for now.
The of homeowners that say it’s a good time to sell percentage decreased to 67% in July from 76% in May, a recent Fannie Mae survey measuring home confidence reported. More than 1 in 4 homeowners believe it’s now a bad time to sell.
“Sellers are sitting on record equity gains from last year and they are locked into very low mortgage rates last year. So it’s not really a good reason for homeowners to sell right now, especially when they see that the market is soft,” Fairweather said. “They can just hold on and wait.”
Still, the recent pullback in buyer demand is unlikely to cause home prices to plunge so sharply that the market will fall into a housing recession, Fairweather said.
“I think ‘housing recession’ is a bit of hyperbole. This is a normal part of the housing cycle. We just had a really hot period,” Fairweather said. “And you know what goes up must come down eventually — that happens in the housing market every so often.”
Gabriella is a personal finance reporter at Yahoo Money. Follow her on Twitter @___gabriellacruz.