Falling home prices are raising the risk of a deeper correction

The latest report on the prices of houses that Celller in a monthly decrease of 0.3 % in the index of 20 cities in April, which is more declining than a 0.2 % reinforced decline in March.

On Tuesday note, Thomas Ryan, an economist in North America, warned that successive declines could indicate “deeper correction”.

“After its decline in March, the decrease in the prices of homes by 0.3 %/m increases the risk that the prices of prices are constantly declining, as the market ultimately increases the weight of the mortgage rates of 7 %,” he added.

On an annual basis for a period of three months, home prices fell 0.4 %, and Ryan pointed out. While prices have risen on an annual basis, they are still slower since August 2023

Informed cases data is not the only red brand, as the FHFA price index showed a monthly decrease by 0.4 %.

Ryan wrote: “It is clear that the current house market loses momentum as the demand remains anemia due to the high borrowing costs in the sky, while more people put their home for sale, forcing the sellers to control their prices.”

Previous data is also lined with the downward trend. The average selling price for the current house has decreased for five consecutive months on a seasonal basis. This is the number of houses available for sale again around prenatal levels.

Certainly low prices make homes more attractive, which may stimulate more demand and represent some comfort for younger Americans who are looking to buy but have been priced outside the market.

But the economists of the Citi Research have informed the continuous opposite winds, attributing the low prices to the high mortgage rates, the high uncertainty, the softening of the demand for the consumer, and the weakness of the labor market.

In addition, the slowdown in the housing sector in general is an early sign that the basic demand weakens this year, City said in the last note.

“Although prices may still fluctuate from month to month, consistent softening in medium sale prices indicates that the trend is likely to continue in more stable measures for new homes such as the case index,” economists foretold.

There is still some reasons for the belief that prolonged contraction could be avoided. Ryan referred to this offer is still relatively narrow, although some expansion recently.

Meanwhile, the mortgage market is also healthy, and it reinforces more than a decade of the strict lending standards that were set after the great financial collapse. In addition, it should prevent the continuation of flexibility in the labor market forced sale in the housing market.

Ryan said: “Everything that is said, that the weak price data means that we must start taking the possibility of the domestic price period more seriously, and this is something that we will study in our next American housing expectations,” Ryan said.