After several consecutive months of tumbling home prices that, in the most overpriced metros in the country, raised concerns over the potential of a crash, the U.S. housing market is finally finding some stability—and so is the global market.
The same happened in other housing markets around the world, as most countries faced a similar situation: higher interest and mortgage rates in response to rising inflation. Sales started to drop, and so did prices. As per Goldman Sachs' House price index, home prices in the U.S., Australia, and Canada were bouncing back up after plunging from their peaks in 2022, with the U.S. scoring 97.23 out of its peak of 100 in the house price index in February, Australia 91.49 in April, and Canada 86.02 in April.
The two economists believe this stabilization is because the lag from higher interest rates may be shorter than initially expected and that other factors—like low housing supply, low vacancy rates in most countries, and strong savings following the pandemic—may have helped the recovery by lifting housing demand.
"Real estate is the first sector to respond to changes in interest rates, therefore, it's no surprise that home sales have fallen and commercial deals are also showing weakness," Lawrence Yun, chief economist at the National Association of Realtors , told"But with mortgage rates showing signs of stabilization and no longer hitting new cyclical highs, it is near certain that home sales will stabilize," he continued, adding that the one sector which is not yet out of...
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