Dear Egghead: It seems housing prices are going down. Will they continue down in the near future?
Answer: As Newton said, a body in motion tends to stay in motion. Prices definitely have downward momentum now, and that’s likely to continue for at least the next few months.
For example, 60 percent of home sellers in Boise, Idaho, lowered their asking prices in June, according to a report by Redfin.
Here are the facts that point to further price reductions:
- Growing inventory. There are about 20 percent more homes on the market compared to a year ago.
- Slowing sales. Sales of existing homes are down about 9 percent compared to last year. Sales of newly built homes are off by 6 percent.
- Falling loan applications. New applications for mortgages have dropped 17 percent over the past year.
- Deals are falling through. Buyers have recently started backing out of contracts — about 15 percent in June.
Sellers are feeling more pain in certain geographic areas. Here’s a rundown of market price drops during June sorted by the percentage of for-sale listings.
Higher interest rates and fears of a recession are prompting buyers to put plans on hold.
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