Economists Have a Strange New Buzzword for the Housing Market That Will Shock Buyers and Sellers

The housing market has been called plenty of things this summer: red-hotinsanebrutal. But the latest word to describe the state of real estate today is almost shocking in its tepidness: balanced.

But what does a balanced housing market actually look like—and mean—for buyers and sellers?

In a nutshell, “balance” means that the raging seller’s market that’s dominated since the COVID-19 pandemic is slowly shifting—not into full buyer’s market territory, but toward a middle ground that puts buyers and sellers on more even footing.

But there’s more to it than just that, and our weekly column “How’s the Housing Market This Week?” can help shed light on these nuances by delving into the latest real estate statistics for the week ending Aug. 20.

Here’s what balance looks like—in terms of home prices, number of new listings, and more—so both buyers and sellers can better navigate this new normal of real estate today.

Homes are lingering on the market longer

Over the past two years, the pace of real estate sales has sped up significantly. Nationally, homes are on the market a median 35 days before getting snapped up. But this rush is waning.

For the week ending Aug. 20, properties spent four extra days on the market compared with this time last year.

For a fourth week in a row, homes are sitting on the market for a longer time than last year. As both buyers and sellers adjust to the rebalancing market, expectations shift, reducing the sense of urgency in the market and reinforcing the trend toward longer sale timelines.

Home prices are still high

The deep irony in listing skittishness is this: Sellers still stand to make bank, since home prices continue to soar through the roof.

Currently, property asking prices clock in at a median of $449,000 nationwide. And for the week ending Aug. 20, home prices shot up by 14.4% over that same time period last year.

To give you a sense of how far this sum has come, prices have climbed by double-digit percentages for 36 weeks straight. Home equity remains at a record high.

Mortgage rates are up

For the week ending Aug. 25, the average 30-year fixed-rate mortgage shot up to 5.55% from the previous week’s 5.13%, according to Freddie Mac.

This is grim news for buyers, since it means that financing a home today is much more expensive than it was a year earlier. The costs of purchasing today’s typical home [is] up more than 50% compared to a year ago.

And perhaps herein lies the reason behind sellers’ growing reluctance to list: If they have to buy a new home, it means they’ll have to lock in a new loan at today’s higher interest rates, which could quickly eat away at any windfall their home sale may bring. And so, with nearly three-quarters of today’s potential sellers also planning to buy another home, it seems that more homeowners are deciding to stay put.

And maybe that’s not such a bad idea. Moving is not a process to be rushed, and a more deliberate, level-headed, and balanced housing market may do us all a world of good.

Works Cited

Dutton, Judy. “Economists Have a Strange New Buzzword for the Housing Market That Will Shock Buyers and Sellers.” Real Estate News & Insights | Realtor.com®, Real Estate News & Insights | realtor.com®, 25 Aug. 2022, www.realtor.com/news/trends/column-weekly-housing-update-20-august-buzzword/.

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