The US Housing Market Continues To Soften As Demand Falls

For the past half-decade, the prices of homes in the US have been gradually increasing. Recently, the market showed a cooling with real estate prices decreasing. The reason for it is the slow-down in demand and the subsequent lessening of construction. Moreover, the interest rates on a home are increasing. Altogether, homebuilders have seen the lowest point in the past three years!

The national home price index by S&P showed a 5.16% rise. This is a sharp deceleration from the 6.09% growth the industry saw previously. Rather, it is the slowest pace visible in a year or two. The seasonally-adjusted house price index (purchase only) by the Federal Housing Finance Agency supports the statistics. The y-o-y rise in 2016 was 6.37%, while in 2017 it was 6.27%. Last year, the number was a mere 5.76%.

A House Price Rise In Major US Cities

S&P numbers show that despite the slow-down, the home prices have risen across twenty main cities of the USA. They are given below in descending order:

• The maximum increase was in Las Vegas at 12.07%
• Phoenix at 8.1%
• Seattle at 6.33%
• Denver at 6.22%
• Atlanta at 6.2%
• Minneapolis at 5.77%
• Detroit at 5.75%
• Tampa at 5.68%
• San Francisco at 5.6%
• Boston at 5.59%
• Charlotte at 5.45%
• Miami at 4.96%
• Cleveland at 4.63%
• Los Angeles at 4.44%
• Portland at 4.38%
• Dallas at 3.96%
• New York at 3.5%
• San Diego at 3.35%
• Chicago at 3.11%
• Washington at 2.72%

The most significant hike was visible in the Mountain region of the country with a y-o-y of 7.44%, says FHFA. The region-specific change in other areas was:

• East South Central at 7.32%
• South Atlantic at 6.68%
• East North Central at 5.73%
• West North Central at 5.59%
• New England at 5.29%

The Impact On Sales Price Of Homes

While the average sales price of homes increased to US$362,400 (a 1.8% y-o-y), the median sales price reduced to US$302,400 (an 11.9% drop). The US Census Bureau provided these numbers for the sale of new homes in the same period. A corresponding increase in the median sales price for existing homes was also noticed. The price is at US$253,600 (a 2.9% hike) from last year. 

The forecast for home sales is not too bright, which portends a significant slow-down in the economy of the nation.