Analysts predict housing market headed for cooling period

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(NewsNation) — Home sales fell 5.4% from May to June, according to the National Association of Realtors, signaling high interest rates and inflation could be taking a toll on a once superheated market.

Demand for mortgages dropped to a 22-year low, as interest rates averaged 5.51% for a 30-year fixed mortgage. Last year rates sat at just under 3%.

The median price of a home nationwide was $416,000 in June, a 13% increase from a year ago.

“What these numbers are really pointing to is that affordability is declining for Americans in homebuying,” said economic analyst Kayla Bruun. “If you think about what a home payment is made of, it’s the principle and the interest and right now buyers are really being burned by both of those.”

A majority of younger Americans still view home ownership as a sign of success, however, according to recent polling by Bankrate. Data shows 65% of millennials and 59% of Generation Z view owning a home as a pivotal mark of success.

Affordability remains the largest hurdle for young people in the housing market. Polling from YouGovAmerica, shows 79% of people under the age of 29 who purchased a home needed help from their parents to do so and 10% of people from all age groups had their home purchased for them by their parents.

“Now with interest rates maybe double where they were a year ago, affordability is really being pinched on both sides,” Bruun said. “That’s really weighing on consumer demand for housing and their ability to buy new homes.”

Miami real estate agent Armando Alvarez said those within the industry expect the market to realign itself with a more normal, healthier market soon.

“What we think is going to happen is it’s going to start inching closer to that middle line, that middle ground, which is six months of inventory,” Alvarez told NewsNation. “That’s a healthy market, that’s what people want to see.”

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