The US housing market is seeing some signs of rising affordability, but it comes at a time when buyers are getting more concern about the economy.
The August 2019 housing trends report from realtor.com highlights the first decline in inventory in a year but prices are easing due to economic fears.
The median listing price in August was up 4.9% year-over-year but down 1.8% month-over-month to $309,000, the largest July to August drop since 2012.
"The state of the housing market as we head into the latter half of 2019 is a tug of war between increased affordability and economic anxiety. We're starting to see this tension play out in our August data," said George Ratiu, senior economist for realtor.com®. "On the one hand, lower interest rates have given buyers more purchasing power, which is contributing to August's decline in national inventory. However, concerns over trade wars and cutbacks in corporate spending are causing some buyers to postpone their search. This is contributing to both the slowdown in prices, as well as the inventory decline, as buyers stay put in their current homes."
Realtor.com’s home shopper survey last month showed that more than 4 in 10 home shoppers are expecting a recession before the end of 2020 and that would prompt more than half to delay their home purchase.
"These strong but opposing forces make it more difficult to predict what will happen in the second half of this year,” added Ratiu. “If the headwinds of economic uncertainty intensify, it could prompt a decrease in buyer demand and shift housing inventory's current trajectory. But if increased purchasing power prevails, we could see even more inventory declines and intensified competition between buyers."
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