Consumer confidence in the housing market has dropped significantly as sharply higher mortgage rates caused a pullback in home sales.
Thus, more people are looking to sell their homes as internet search data shows that search engine traffic for home sales has shot up. As of July 2022, searches for ‘sell my house’ skyrocketed by 147% in the US, the highest level in internet history for America, according to the analysis of Google trends search data shared with Finbold.
Similarly, RubyHome, a luxury real estate platform, claims that searches for ‘sell my home’ have exploded over the past month to reach double the average figures. A spokesperson from RubyHome commented on the findings:
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“With the rate of inflation skyrocketing in recent years, the value of a house has increased massively, meaning homeowners and sellers are in a prime position to reap the benefits, especially with any money left over from selling a property being able to help towards the growing costs of everyday items.”
The spokesperson also added:
“With Zillow’s report that the average house price in America has risen 20.7% from last year, it is clear to see why Americans are tempted to sell at this time. However, with affordable housing becoming increasingly challenging to come across throughout America, it will be interesting to see if these figures translate into actual sales and what this may mean for the housing market.”
Softening market
What’s more, pending home sales, a leading indicator of housing activity, in the US are down 20% year-on-year in June of 2022, the second most significant decline since the 33.1% slump seen in April of 2020.
Additionally, the pending home sales generally lead existing-home sales by a month or two because a home goes under contract a month or two before it is sold.
Economists like Christophe Barraud, Bloomberg’s top forecaster, see all leading indicators pointing to a US housing market decline.
“Most of the recent indicators suggest that US housing market has deteriorated further since June.”
Furthermore, losses in the stock market have also caused demand for higher-end homes to drop. On the flip side, during the pandemic lockdowns, falling mortgage rates offset increases in home prices and potential losses in the stock market for home buyers.
With the rise in mortgage rates, homes become more expensive while monthly payments for a $300,000 house are close to $2,000, while they were ‘only’ $1,192 in 2019.
Despite banks being in a better position than in 2008 when the housing crash almost brought down the entire financial system, the current softening of the housing market could bring more trouble to the broader markets down the line.
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