Home Prices Dipped 1.2% in August. Could the Housing Market Be Cooling Off?
Here's what buyers need to know about the state of the housing market given recent data.
There's a reason why home buyers have been struggling to purchase homes in today's real estate market. Home values have been extremely inflated since the start of the year. We can thank high demand and low supply for that.
But in August, the median sale price of a home dropped 1.2% from the month prior to $335,000, according to RE/MAX. And that's a small but encouraging sign for buyers.
Home values are still up
While a decline in home sale prices in August spells potential good news for home buyers, the reality is that home values are still way up from last year's levels. In fact, despite a drop from July, the median home sale price in August was still up 13.2% from August of 2020.
What's also concerning is the fact that housing inventory in August was reported to be 26.7% lower than the number of homes available for sale a year prior. Until more properties hit the market, home prices are likely to stay high.
Still, a modest dip in August's pricing levels could mean that the housing market is finally starting to cool off a bit. Also, the average number of days on the market for homes sold in August came to 24, which is actually a one-day increase from July. When homes take longer to sell, it means that fewer buyers are jumping on them. And while a one-day uptick isn't much to write home about, given the way the housing market has been so challenging for buyers, every little bit of positive movement helps.
Is it a good time to buy a home?
From a mortgage-rate perspective, it's a great time to buy a home. Mortgage rates are still sitting near historic lows, and if you have a great credit score, you're likely to qualify for a competitive deal.
That said, home prices are still pretty high across the board, despite the recent dip. And inventory is still lacking in a very big way. As such, you may want to put your plans to buy a home on hold until prices come down even more and inventory picks up. (Incidentally, once more homes hit the market, prices should start dropping.)
If you're worried that waiting to buy a home will mean giving up a chance to lock in an affordable mortgage rate, don't be. There's a very solid chance that rates will stay low throughout 2022, and quite possibly beyond. So there's really no reason to rush to buy a home this year -- especially if you've been struggling to find a place that suits your needs and budget.
Remember, overpaying for a home could leave you in a situation where you struggle to keep up with your mortgage payments. So if you're not finding homes that comfortably fit into your budget, you may be better off sitting tight and seeing what happens in the coming months. Even if home prices dip modestly on a month-over-month basis, they could end up being significantly lower by the time 2022 starts off.
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