Some of the hottest housing markets are falling the hardest



“Rising prices and mortgage rates have priced out some potential buyers while causing others to conclude that waiting to buy could pay off, especially as listings rise,” said Andrew LePage, a CoreLogic analyst. “For the past three months, sales have fallen year over year in all six counties and, in the last two months, across most major price categories including above $1 million.”

Mortgage rates rose sharply in September, and by October, the average rate on the 30-year fixed was more than a full percentage point higher than a year ago. With home prices already overheated in many major markets, higher rates broke the bank for most buyers.

Rates fell back again in November, but were still higher than a year ago. The drop did little to boost sales. Mortgage applications to buy a newly built home actually fell 11 percent year-over-year in November, according to the Mortgage Bankers Association, despite the rate relief.

And after one of the worst housing shortages in memory, supply is slowly starting to rise. Housing inventory in the large metropolitan markets Redfin tracks was up 5 percent in November annually, the largest supply boost in three years. Of course all real estate is local, and some markets are filling with listings faster than others.

Inventory jumped in formerly hot markets like San Jose (+123 percent), Seattle (+96.5 percent) and Oakland (+60 percent) but other markets are still seeing drops, like Philadelphia (-24 percent and New Orleans (-19 percent).

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