After the onset of the COVID 19 pandemic, the prices for houses in the US increased at a very high rate. The cause for such an increase is the rising demand that was caused by low fixed mortgage rates. As a result, a large number of homes are selling above the regular price. This kind of economic expansion was harmful to the US. The good news is that the market boom is starting to cool down. As of September 2021, the housing market has shown to be past its peak. This means that the price of houses will continue to drop.
In August 2021, the demand for houses in the US remained strong but substantially reduced. This indicates that the peak period is over, and soon enough, prices will go down due to the reduced demand. The demand for homes has decreased by approximately 9% within the last five months. This is a good sign that soon, the prices for houses will return to how they used to be before the onset of the pandemic. In turn, people will be able to afford houses without straining their pockets. People will also get access to homes whose prices match the house’s market value.
What shows the market is cooling down
If you have been looking for a house in Plymouth Iowa, you might still find that the houses are priced high. This makes people question how the market for homes is cooling down, yet the prices are still high. A boom like that experience in the US housing market does not end instantly. It will take time before the prices have stabilized. However, using national data, one can quickly realize that the boom is coming to an end. The decrease in pending sales is a clear indication that the boom is coming to an end.
The share of homes sold above the asking price has also dropped a lot since March 2021, indicating that the market is cooling down. Therefore, in the next few months, a few to no houses will be sold above the asking price. In addition, the number of homes that have an accepted offer has also reduced, which shows the demand for homes is declining. A decrease in the need for homes will result in a reduction in the prices of those homes. This means that the market is in the process of cooling down and is expected to cool down completely in the future.
However, some experts are speculating that the demand for homes will remain high in the winter. If such a case happens, the cooling will be seasonal, and the need for houses in the US will still be uncertain. On the other hand, if the demand increases during the fall, prices will go up again, creating another economic boom. The decline in listings from June has also indicated seasonal changes in the market for homes in the US.
Specific economic factors could also be playing a significant role in the decline in the demand for homes. Choked supply chains and slow labor growth have highly affected people’s income. This means that a substantial number of people do not have enough funds to buy a home. It is for such a reason, the market for housing in the US is cooling down. However, as these economic conditions continue to improve, the demand for houses might experience a boom again.