Yun says high-priced regions such as California are most vulnerable to a downturn in prices. In fact, that is already playing out in notoriously pricey markets like San Francisco, where the median sale price in June was down 8.8 percent year-over-year, Oakland, which saw an 11.3 percent drop, and Los Angeles, where the decline was 7.1 percent, according to Redfin data.
—Inventories are still very low: The National Association of Realtors says there was a 3.1-month supply of homes for sale in June. Back in early 2022, that figure was a tiny 1.7-month supply. This ongoing lack of inventory explains why many buyers still have little choice but to bid up prices. And it also indicates that the supply-and-demand equation simply won’t allow a price crash in the near future.
—Demographic trends are creating new buyers: There’s strong demand for homes on many fronts. Many Americans who already owned homes decided during the pandemic that they needed bigger places, especially with the rise of working from home. Millennials are a huge group and in their prime buying years. And Hispanics are a growing demographic also keen on homeownership.