“A Housing Market Hangover”

“…The housing market has “basically been in hibernation since late summer,” said Daryl Fairweather, the chief economist for Redfin, which anticipates 16 percent fewer home sales in 2023 compared to 2022, dropping to the lowest level since 2011, around the time the last housing cycle bottomed out. “This is profound,” she said. “It’s like it ran out of gas.”

Sales have fallen, yet prices are largely holding. In November 2022, home prices were up 2.6 percent from November 2021, while sales were down 35.1 percent during the same period, the largest drop in a decade, according to Redfin. A healthy housing market usually has four to five months supply; in November, the country had a 3.3 month supply of homes, according to the National Association of Realtors…

For first-time home buyers, the current conditions are particularly bleak: Home prices skyrocketed 45 percent from December 2019 to June 2022, according to Standard & Poor’s CoreLogic Case-Shiller Home Price Index. First-time buyers, who overwhelmingly finance their homes, are now paying far higher borrowing costs as they compete against cash buyers…”