- Diana Olick on CNBC noted a spring housing market shift, with home prices slowing and dropping year-over-year in markets like Miami and Austin, while 44% of Q1 sales included seller concessions, up from 39% last year.
- Newly built homes are priced slightly below existing homes, defying the usual premium, as builders cut prices and offer low-cost options, despite a 50% price surge over five years.
- Buyers are pausing purchases due to economic uncertainty, inflation fears, and job concerns – not mortgage rates, which have stabilized between 6.7% and 7.1% – reflecting unease about their financial stability.
Diana Olick, speaking recently on CNBC, highlighted a significant shift in the spring housing market, where home prices, despite a 50% surge over the past five years, are now slowing rapidly, with major markets like Miami, Atlanta, Tampa, San Francisco, Nashville, Minneapolis, and Austin showing year-over-year declines, while Phoenix and Denver teeter on the edge of negative territory. Data from Parcel Labs underscores this trend with real-time price drops, and a Redfin report revealed that 44% of home sales in Q1 involved seller concessions – up from 39% the previous year and nearing the 45% record high from early 2023 – covering costs like repairs, closing fees, and mortgage rate buy-downs, though not direct price reductions. Meanwhile, the median price of newly built homes has dipped slightly below that of existing homes, an unusual reversal of the typical new construction price premium, driven by builders lowering prices and offering more affordable options amid a still-tight existing home market.
Olick noted that buyer hesitation is palpable at the peak of the spring market, with many pausing purchases despite available inventory and financial capacity, as observed at an open house in Dallas where prospective buyers expressed reluctance despite liking the properties. This caution stems from broader economic uncertainties rather than mortgage rates, which have stabilized between 6.7% and 7.1% over the past year, a range buyers are increasingly accepting as the new normal. Instead, concerns about rising costs due to inflation, job security, and the overall economic outlook are driving anxiety, with buyers worried about their personal wealth and the risks of committing to a home – their largest investment – amid such instability.
The housing market’s dynamics reflect a complex interplay of supply, pricing, and buyer sentiment, with builders attempting to stimulate demand through price adjustments and concessions, yet facing a market where economic fears outweigh the impact of mortgage rates. Olick’s insights suggest that even as inventory grows in the existing home sector, the psychological and financial barriers for buyers remain significant, potentially signaling a cooling period ahead. This shift challenges the notion of a perpetually rising market, as the rapid price gains of recent years give way to a more cautious landscape, where economic uncertainty rather than financing costs dictates buyer behavior.
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