Home prices fell 1.2% in August. Could the housing market cool down?
There’s a reason homebuyers have a hard time buying homes in today’s real estate market. Home values have been hugely inflated since the start of the year. We can thank the high demand and the low supply for this.
But in August, the median selling price of a home fell 1.2% from the previous month to $ 335,000, according to RE / MAX. And that’s an encouraging little sign for buyers.
Home values are still on the rise
While a drop in home selling prices in August signals potential good news for home buyers, the reality is that home values are still rising from last year’s levels. In fact, despite a decline from July, the median home selling price in August was still up 13.2% from August 2020.
What is also concerning is the fact that the housing stock in August would have been 26.7% lower than the number of houses available for sale a year earlier. Until more properties come onto the market, home prices are likely to stay high.
Nonetheless, a slight drop in price levels in August could mean that the housing market is finally starting to calm down a bit. Additionally, the average number of days on the market for homes sold in August was 24, which is actually a one-day increase from July. When homes take longer to sell, it means fewer buyers are hopping on them. And while a one-day hike isn’t something to think about, given how the housing market has been so difficult for buyers, every little positive move helps.
Is Now a Good Time to Buy a Home?
From a mortgage rate perspective, now is a great time to buy a home. Mortgage rates are still near their historic lows, and if you have a great credit rating, you are likely to qualify for a competitive offer.
That said, house prices are still quite high overall, despite the recent drop. And the inventory is still very seriously lacking. As such, you may want to put your home buying plans on hold until prices drop even more and inventory increases. (Also, once new homes come on the market, prices should start to drop.)
If you’re worried that waiting around to buy a home means giving up your chance to get an affordable mortgage rate, don’t be. There is a good chance that rates will remain low through 2022, and most likely beyond. So there’s no reason to rush out to buy a home this year, especially if you’re struggling to find a place that suits your needs and budget.
Remember, if you overpay for a house, you could find yourself in a situation where you will have a hard time meeting your mortgage payments. So if you can’t find homes that comfortably fit your budget, you might be better off just sitting around and seeing what happens in the months to come. Even if house prices drop slightly from month to month, they could end up being considerably lower by the start of 2022.
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