America's housing bubble has collapsed and people's greatest concerns of a housing market crash have been made true. National news outlets across the United States sounded the alarms as data from The National Association of REALTORS® (NAR), Realtor.com, and other key industry organizations confirmed several leading indicators of the U.S. housing market entering a recession.
Want to know what this means for your most precious asset? Get the full breakdown of the data and trends, and see what comes next as Licensed REALTOR® in the State of South Carolina - Dave Wallace breaks down the current collapse of the real estate market.
According to the NAR, several leading indicators of a housing market recession are present, including:
Compared to one year ago, affordability fell in June as the monthly mortgage payment climbed 53.7% and median family income rose by 5.8%.
The effective 30-year fixed mortgage rate1 was 5.60% this June compared to 3.03% one year ago, and the median existing-home sales price rose 13.3% from one year ago.
June's affordability index figure of 98.5 is the lowest since June 1989.
First-time buyers typically spend 25.6% of their family income on mortgage payments, making a home purchase unaffordable. A mortgage is affordable if the mortgage payment (principal and interest) amounts to 25% or less of the family's income.
Housing affordability had double-digit declines from a year ago in all four regions. The South had the biggest decline of 32.9%. The South experienced a weakening in price growth of 29.4%, followed by the Northeast at 29.1%. The West had the smallest dip of 28.7%.
Compared to one year ago, the monthly mortgage payment rose to $1,944 from $1,265, an increase of 53.7%.
According to MarketWatch, The number of foreclosure starts — which is when the first public foreclosure notice happens — is up 219% since the start of the year, according to real estate data analytics firm ATTOM Data Solutions’ midyear 2022 U.S. foreclosure market report. What’s more, the number of properties that had foreclosure filings (this number includes foreclosure starts) is up 153% from the same time period last year.
According to Forbes, In signs that housing inventory is seeing meaningful recovery, active listings rose in July at a record annual pace — up 30.7% — for the third month in a row, according to the Realtor.com Monthly Housing Trends Report released on Tuesday.
Data from the National Association of Home Builders shows that both Homebuyer Traffic and Builder Sentiment have crashed in recent months. Meanwhile, Housing Starts have also declined at a staggering rate.
These are historical signs that America's housing market is tilting into Recession. And the rate at which these leading housing market indicators are accelerating should be concerning to all homeowners.
However, the silver lining is that these indicators are already starting to provide much-needed relief for homebuyers who haven't been able to buy a house in a reasonable housing market since the global pandemic started.
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