Yahoo Finance’s Dani Romero joins the Live show to discuss housing demand, rising mortgage rates, and home price appreciation.
BRAD SMITH: Welcome back, everyone. Higher mortgage rates are taking a toll on consumers with housing demand slipping in June, causing price appreciation to drop at a record rate to 17.3%. That’s according to data from Black Knight. Yahoo Finance’s Dani Romero joins us now to help break this down. Dani.
DANI ROMERO: Look, Brad, home prices are still pretty high but, like you said, those price appreciation gains have slowed in the month of June. Now, price gains are still strong due to the imbalance of supply and demand. Now, the housing market has had a severe shortage, but due to the strong demand that we experienced during the pandemic, that only made it worse. So prices are not really expected to drop nationally due to our strong housing market.
But those higher mortgage rates are really taking a toll on those first-time home buyers. The average rate of that 30-year fixed mortgage rate jumped to 6% in June, according to Mortgage News Daily, but that has dropped to 5%. Still pretty significantly higher from the beginning of the year. Experts say that this slowdown is pretty broad-based among the top 50 markets. And for example, in Seattle, prices dropped 3.8%, which is about a $30,000 reduction.
Experts say that the market would have to see this for the next six months in order to– for price growth to really go back to those long averages, run averages. Now, the cooling off does coincide also with the jump of supply for home for sales. It’s up 22% for the past two months. Now, price drops will not affect the average homeowner compared to the– at the time of the Great Depression due to the fact that these homeowners have more equity.
JULIE HYMAN: Well, that’s good news, I suppose. And we’re going to talk about commercial real estate in the next block– thanks so much, Dani, appreciate it– and figure out what’s going on there.