Real estate prices may be on the verge of a

Real estate prices may be on the verge of a slowdown –

After property prices have risen steadily since January, they could now fall again.

According to Black Knight, the latest house price data hit another all-time high in July, rising 2.3% from the same month last year. That’s a larger annual gain than June’s roughly 1%, and August’s year-over-year increase is likely to be even larger since prices began falling sharply last August.

However, according to Black Knight, prices weakened month-on-month. Although they were still gaining, as is typically the case this time of year, the gains fell below their 25-year average. This after they significantly exceeded their historical averages from February to June. This is a signal that a weakening in prices may be underway again.

“In addition to monthly increases slowing below long-term averages, Black Knight’s rate retention and sales transaction data also indicate lower average purchase prices and seasonally adjusted prices per square foot in recent sales,” said Andy Walden, vice president of corporate research at Schwarzer Knight. “All of these factors together highlight the need to focus on seasonally adjusted monthly movements rather than simply relying on the traditional annual growth rate of house prices.”

Behind the cooldown: mortgage rates. They rose sharply last summer and fall, causing prices to fall. They then fell for much of the winter and part of the spring, causing property prices to rise again. Interest rates are now back above 7% and reached their highest level in over 20 years in August.

In addition, the number of new entries increased from July to August, which is untypical for this period of the year. Some sellers may be trying to capitalize on these historically high prices. However, active inventory is about 48% below 2017-2019 levels.

“While the increase in new listings is good news for homebuyers, inventory remains persistently low even as record-high mortgage rates dampen demand,” said Danielle Hale, chief economist at

A price drop would provide some relief for buyers, but unlikely enough.

The rise in property prices since the start of the Covid pandemic, coupled with significantly higher mortgage rates, has impacted affordability.

According to Black Knight, it now takes about 38% of the average household income to make the monthly payment to purchase a home at the average price. This means that home ownership is more affordable than it has been since 1984.