“Mansion Global” host Katrina Campins talks about the state of the housing market on “Making Money.”
Rising home prices are forcing many would-be home buyers out of the U.S. housing market. Rising mortgage interest rates Prices continue to rise due to limited supply.
But a new report from Realtor.com suggests that buyers may feel more at ease in certain parts of the country where rising inventory has caused prices to fall.
In these known “cold” housing markets, homes may remain on the market for more than a year, causing asking prices to drop sharply amid weak consumer demand.
The report found that the weakest housing markets right now are concentrated in the South, particularly in the Gulf Coast regions of Texas, Florida and Louisiana. In fact, 15 of the top 20 weakest housing markets in the country are in Texas, Florida and Louisiana.
The U.S. housing market is “in a tailspin” and could remain so until 2026
The coldest city in the nation was Lake Charles, Louisiana, followed by Houma, Louisiana, Panama City, Florida, Punta Gorda, Florida, and Naples, Florida.
Waterfront home near Naples Pier on February 13, 2024 in Naples, Florida. (Photographer: Lizette Morales McCabe/Bloomberg via Getty Images/Getty Images)
Some of the coolest cities in Texas were Brownsville, El Paso, and Corpus Christi.
Realtor.com based its analysis on a variety of factors, including days on market, inventory changes, price fluctuations and unique listing page views per property.
Economists at Realtor.com say “unique challenges” are likely causing the Gulf housing market to stagnate more than the rest of the U.S. While soaring home prices and rising mortgage rates are putting a strain on homebuying nationwide, Gulf markets face the added burden of rising home insurance costs.
The researchers Rising insurance premiums Some of the issues include weather disasters, rising reinsurance rates and rising home repair costs due to rising costs of building materials caused by inflation.
Mortgage calculator: See how much rising interest rates will cost you
“For homebuyers looking for amenities, southern markets are offering much-needed hospitality,” said Ralph McLaughlin, economist at Realtor.com. “Inventory is increasing, especially for entry-level homes, but activity is slow and asking prices are actually down compared to last year.”
A home in Hercules, California, on August 16, 2023. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
There are a variety of driving forces behind the nationwide rise in home prices.
Between COVID-19 pandemicHome prices surged to their highest level since the 1970s as homebuyers flush with stimulus money and desperate for more space during the pandemic flocked to the suburbs, taking advantage of ultra-low mortgage rates.
Demand was so high and inventory so low that at the height of the market, some buyers forego home inspections and appraisals or paid hundreds of thousands of dollars above the asking price.
This enthusiasm is Federal Reserve The government has embarked on the most aggressive interest rate hike campaign since the 1980s in an attempt to slow the economy and tame runaway inflation, pushing the average rate on a 30-year mortgage above 8% for the first time in years.
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These rising mortgage rates have created a “golden handcuff” effect on the housing market: Sellers who locked in record-low mortgage rates of 3% or less at the start of the pandemic are now reluctant to sell, further restricting supply and leaving eager would-be buyers with few options.
Mortgage buyer Freddie Mac said Thursday that the average interest rate on a 30-year loan fell this week to 6.86% from 6.87%, down from a fall peak of 7.79% but still well above the pandemic-era low of just 3%.
