The housing correction hits the local housing market – this interactive map shows how hard it can be

Across the country, sales of both existing homes and new homes are dropping — fast. Fearing oversupply, many builders are cutting back on their expenses. Or at least stop building unsold homes.

It is widely understood that there is a housing shortage in America structurally. The problem is that housing demand fluctuates and flows periodically based on factors such as consumer confidence and affordability. With lower demand, as we see it today, builders will react by slowing down housing starts,” Wolf says. “Having too much inventory is a problem for the broader housing market as well, as if builders need to cut prices, sellers in the resale market may need to To lower prices as well to stay competitive.”

How will this correction affect housing prices? We don’t know exactly yet. But we know what to watch: A rising inventory is arguably the best indicator of what awaits housing. Since March, stock levels have risen across the country. However, this stock rise varies widely by market. lets take alook.

Of the 917 regional housing markets that realtor.com tracks, 873 saw a rise in inventory levels – the number of unsold listings – between March and June. Of those, 137 markets saw at least a 100% increase. In 50 markets, including Provo and Utah (up 268%) and Austin (up 260%), stock is up more than 150%.

It is clear that the regional housing markets in Mountain West and the Southwest are experiencing the fastest slowdown. Ironically, those markets were among the hottest amid the pandemic housing boom. As white-collar professionals realized that COVID-19 had given them the ability to work remotely on a permanent basis, many cities like San Francisco and Seattle fled to more affordable markets in places like Phoenix and Boise. This frenzy has driven home prices in the Mountain West and Southwest housing markets below their real value compared to the underlying economic fundamentals.

“Many markets in the West are landlocked for one reason or another… As a result, construction is more limited in these markets than in parts of the country with less regulation and more developable land. Strong demand over the past couple of years has driven up housing prices across the country. country, and the West appears to be hitting the pricing cap faster than other markets due to their own supply constraints,” says Wolff. luck.

While stock levels are rising rapidly, they remain well below pre-pandemic levels. In fact, of the 917 markets that realtor.com tracks, 899 have stocks below June 2019 levels. Of these, 601 are still at least 50% below pre-pandemic levels. says Logan Mohtashemi, Senior Analyst at HousingWire luck That national stock levels would need to cross 2 million before we start discussing the possibility of an annual decline in home prices. In June, the national stockpile reached 1.26 million.

Looking ahead, Zandi doesn’t see a housing collapse. Instead, he expects US home prices to remain unchanged over the next 12 months, while he says heavily “overvalued” housing markets, such as Boise and Charlotte, are preparing to see prices drop 5% to 10%. But that is if there is no recession. In the event of a recession, Zandi expects home prices to fall in the US by 5% nationally and by 15% to 20% in heavily overvalued housing markets.

One reason Zandi is not anticipating a housing crash: If things start to get really bad, the Federal Reserve may give up on tightening monetary policy. If that happens, buyers may be lured back into the market by lower mortgage rates. The Fed’s goal is to slow inflation – not a market crash.

“I would say if you are buying a home, or someone or a young person looking to buy a home, you need a little bit of Reset. “We need to get back to a place where supply and demand come back together and where inflation is down again, mortgage rates are down again,” Fed Chairman Jerome Powell told reporters last month.

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