Winter brought a surprise polar vortex that fed into a spring home-buying season that didn’t produce astounding results, but the remaining month of summer and rest of the year are projected to finally produce strong housing activity, according to Redfin Chief Economist Nela Richardson.
“Homebuyers who have been willing to wait for better deals are starting to be rewarded for their patience, as sellers drop listing prices to meet buyers’ more value-focused expectations,” Richardson said.
“Two market developments in July are spurring this change in housing activity as the market transitions from the summer to the fall buying season,” she added.
1. Home-price slowdown
Home-price growth was mostly flat in July for the first time in five months, Richardson explained.
As Senior Financial Reporter Trey Garrison said Friday morning, home-price growth has slowed across the board, and Capital Economics says the slowdown will likely meet the company's forecast for inflation to slow to 4% in 2015.
“Even we were a little surprised by the consecutive month-on-month declines in house prices during April, May and June on the new monthly Case-Shiller national measure,” said Paul Diggle, property economist with Capital Economics. “Echoing that message, the Case-Shiller 20-City measure of house prices fell during the latest two months.”
2. End of seller’s market
“The second is a shift in pricing power from sellers to a more balanced market. That shift has been nearly nine months in the making from when sales began to first decline last November,” Richardson said.
Back in October, HousingWire reported that sellers were starting to lose their dominance in the market, with 72% of surveyed agents describing now as a good time to sell compared to 86% in the second quarter of 2013.
“We expect the confluence of these two trends to drive an unusual surge in home sales this fall. We also expect prices to continue to flatten, and to potentially decline month over month in September or October. If that happens, it will be the first three-month price decline since the fall 2012,” Richardson concluded.