Home Price Declines Resumed in November As Buyers Await Better Deals (November 2022 Market Report)
Home values slipped 0.2% in November, resuming a slow decline that began this summer.
The typical U.S. home value fell slightly from October to November (-0.2%), as high interest rates further discouraged home buyers.
Renters Need to Work 63 Hours to Pay Rent, Six Hours More Than Before the Pandemic
An average American needs to work about 63 hours to earn enough to pay the typical U.S. rent of $2,040. That is three more hours than they would have needed to work a year ago, and six hours more than in October 2019, before the pandemic.
Home values inched up 0.1% in October, as tight inventory kept pricing surprisingly resilient. Still, this flicker of demand strength might be a belated response to the late-summer drop in mortgage rates, to an average of 5.22% in August on a 30-year fixed loan, which gave some buyers a reason to jump off the fence and buy then.
The typical U.S. home value was nearly flat from September to October (+0.1%), as buyers and sellers potentially settled on a new market equilibrium.
Housing Inflation is Likely Poised to Decelerate by Early 2023
A growing body of research shows the Zillow Observed Rent Index (ZORI) leads survey-based average rent indexes, including the rent component of the Consumer Price Index, by up to 12 months.
Home values flatlined in September, ending a 2-month slide in which they fell 0.4% from a peak of $359,719 in June. The reprieve in home price declines may be thanks to a late-summer drop in mortgage rates, to an average of 5.22% in August on a 30-year fixed loan, which gave some buyers a reason to jump off the fence and buy then. Due to the elapsed time of multiple weeks between home purchase offers being made and the transactions closing, August’s more favorable lending conditions likely affected closed sale prices in September. Unfortunately for buyers, rates have risen dramatically since August, and reached a new 20-year high of 6.92% in mid-October, promising a further market cooldown ahead.
The typical U.S. home value was unchanged in September from August, likely reflecting a response to a late-summer drop in mortgage rates. Rates have since surged higher, which will likely dampen demand this fall and place more downward pressure on prices.
Monthly payments on a typical mortgage are more than 75% higher than they were in June 2019. Affordability challenges are tamping down competition in formerly red-hot markets, causing steep drops in pending sales in places like San Jose, Seattle, and Salt Lake.
