People walk by a sold sign in front of a house along the Erie Canal in Pittsford, New York, on Monday, Sept. 6, 2021.
Ted Shaffrey/AP Photo
- After a year when housing prices skyrocketed, househunting is shaping up to be easier in 2022.
- Inventory is bouncing back, demand is cooling, and prices are even falling for the most popular homes.
- But supply is still historically scarce, meaning buyers will have to shop hard for bargains.
Economists told Insider in July that 2022 will be an easier time for prospective homebuyers. New signs suggest that exact forecast is holding up.
The last 12 months have been among the hardest in history for American house hunters. A shortage of available units fueled bidding wars and drove prices higher at a record pace. Builders were slow to shore up supply. While the broader economy healed, housing became less and less attainable.
New data signals the chaos of the 2021 housing market is giving way to a more normal buying environment. The chasm between buyers’ demand and the market’s supply is closing, albeit slowly. And while economists expect prices to keep soaring next year, signs point to 2021 serving as the peak for the housing-market frenzy.
A few indicators hint demand is already easing.
The Common Haus Price Index — which tracks asking prices for the popular three-bed, two-bath US home — slowed to a year-over-year rate of 5.4% from 5.9% last week, according to housing economist Ralph McLaughlin. That marks the smallest one-year jump since January 2020, again echoing pre-crisis trends.
Prices have fallen more dramatically on a seasonal basis. The price of the most common US home slid to $337,000 last week from $340,000. The latest average is now $26,000 below the 2021 peak of $363,000, the largest seasonal gap in data going back to 2012, McLaughlin tweeted Tuesday. (Prices typically fall heading into the holiday season as the market cools off, so comparing the seasonal drop with those seen in past years shows the correction is larger than usual.)
At the other end of the market, supply is bouncing back at the fastest pace since May. US housing starts leaped to an annualized rate of 1.68 million in November, according to Census Bureau data published last week. That beat the median forecast of a 1.57-million-unit pace.
Adding multifamily units into the mix makes for an even rosier outlook. There were nearly 1.5 million single family and multifamily units under construction in November, according to government data. That combined figure is the highest its been since 1973.
The pickup isn’t likely to be a one-month boom, either. Building permits rose more than expected in November to the fastest pace since August. Though permits serve as just the first step in getting new homes to market, they are a leading indicator for residential construction. The increases in both starts and permits suggest supply will swing higher later in 2022 and beyond.
Even bidding wars are slowing down. Redfin has been keeping a competition index from its own real-estate professionals’ data, and 59.5% of home offers faced competition in November. That may sound like a lot, but it’s the lowest in 11 months, and down from April’s high of 74.6%.
To be sure, it will take some time before the nationwide home inventory looks anything like it used to. The supply of active listings plunged 26% in the 12 months that ended in November, according to Realtor.com. The inventory of available homes is at the latest of several record lows, a whopping 55% below levels seen in 2019.
And the indicators of an inventory rebound and price cut are set to be unequal depending on what region of the country you’re looking at. The sunbelt has boomed throughout the pandemic and shows no signs of getting cheaper anytime soon. Whatever houses hit the market there are sure to be snapped up quickly.
Redfin’s competition index bears this out. While the national rate has fallen into the 50% range, the sunbelt faces a much higer percentage of bidding wars, led by Richmond, Va. (80%); Salt Lake City (73.8%); San Diego (72%); Honolulu (71.1%); and Dallas (70.6%).
In general, homes are still being sold at a blinding pace. The average time homes spend on the market fell to 47 days in November, down from 57 days the year prior. Although the measure is swinging higher as the market settles into the slower holiday season, homes are still sold faster than in any November in recent history, Realtor.com said. Inventory might be bouncing back, but it’s not rebounded enough to normalize the market just yet.
Buyers will have to wait a little while longer for home shopping to cool down, but 2022 should be a better time to buy, at last.
Read the original article on Business Insider 
