As the U.S. housing market cools amid higher prices and interest rates, the euphoria that fueled double-digit price increases and bidding wars shows signs of easing.
Online real estate brokerage Redfin, for instance, reported multiple bids on 61 percent of homes in August, a tumble from March’s 76 percent. A measure of home-buyer traffic maintained by Credit Suisse also showed that traffic in August fell to the lowest level since December 2011.
“The market is having a bit of a hangover,” Greg Markov, a real-estate agent with HomeSmart International in Phoenix, told the Wall Street Journal. “We partied pretty hard, and you can’t go on partying like that all the time.”
New homes are more likely to be impacted by the slowdown than existing ones because lifted prices on new homes have been more aggressive and buyers cannot close as quickly on homes that don’t yet exist.
But part of the problem, according to some agents, is “seller greed.” Having priced their homes too high, sellers hit a wall when buyers balk at the combination of high prices and rising interest rates.
The housing market may also be falling victim to its surprising recent success. Inventory for existing homes for sale fell to a 4.8-month supply in July from double that amount in July 2010, according to information from the National Association of Realtors cited by the Journal.
Several other indicators of housing activity, however, have yet to catch up with the slowdown because they measure sales that went into contract back when the summer activity was robust. [WSJ] — Julie Strickland