<p class="p2">New data <a href="https://finance.yahoo.com/news/something-big-happening-housing-market-211500249.html"><span class="s1">show</span></a> that the “hot” housing market — which sent home prices sky-high — could now be changing course.</p>
<p class="p2">Recent <a href="https://www.foxbusiness.com/economy/new-home-sales-plunge-april"><span class="s1">data</span></a> from the Census Bureau showed that new home sales went down by 16.6% in April from the previous month. Analysts had expected a drop of 1.7%. That’s the fourth month in a row that new home sales have gone down. Existing home sales slipped 2.4% month over month, according to the <a href="https://www.nar.realtor/research-and-statistics/housing-statistics/existing-home-sales">National Association of Realtors.</a></p>
<p class="p2">The short supply of homes for sale, which has been a big problem, is now on the rise, and demand for homes seems to be going down as fewer people are touring homes.<span class="s2"> <span class="s3"><a href="https://www.redfin.com/news/housing-market-update-record-spke-in-price-drops/">Redfin</a> reported that 15% of people selling a home in April reduced their asking price</span>. A year ago, only 9% of homeowners did a price drop.</span></p>
<p class="p2">Hikes in interest rates are likely a big part of it. The Federal Reserve has tried to calm down the housing market by increasing rates over the last few months. In December, the average 30-year fixed mortgage was 3.11%, and recently the number’s been over 5% — the highest rate since 2009.</p>
<p class="p2">The higher rate means people can&#8217;t afford to borrow as much, as they are looking at a much higher mortgage, and some are delaying buying homes altogether. However, the prices aren’t going down immediately — while they are dropping, most homes are still selling for more than their asking price and selling very quickly.</p>
<p class="p2">Some experts say that it’s also going to take some time to get through the high demand created by a shortage of inventory over the past several years. Essentially, there’s a backlog of buyers lined up to get homes, but once that backlog of buyers runs out, the housing market could drop further.</p>
<p class="p2">The rise in interest rates means that Americans are spending significantly more of their paychecks on housing now than just a few months ago. In December, the average American household would have to pay 24% of its monthly income to pay a mortgage on the average-priced home in the U.S. By May of 2022, the average American would have to spend 34% of their income to pay for the same house, according to <a href="https://www.blackknightinc.com/"><span class="s5">Black Knight</span></a>, a mortgage tech and data provider. Again, that’s the biggest number since 2006.</p>
<p class="p2"><span class="s4">As far as whether or not Americans are in a housing bubble, i</span>t depends on who you ask. Some experts are saying we’ve seen similar conditions in the lead-up to past housing bubbles. Mark Zandi, a chief economist of Moody’s Analytics, told Fortune that increasing mortgage rates should create year-over-year growth of home prices to go down to zero by this same time period next year. Right now, year over year growth is up 19.8%. If that happens, it would be the slowest home price growth rate since April 2011 to April 2012.</p>
<p class="p2">Zandi said he is anticipating that some of the most overpriced housing markets in the U.S. will actually go down between 5 to 10% over the next year. Specifically, he pointed to Charlotte, North Carolina, and Phoenix, Arizona, as locations where this correction of house prices could happen. However, those cities aren’t alone. <a href="https://fortune.com/2022/05/02/home-prices-in-these-markets-could-fall-moodys-says/"><span class="s5">An analysis provided by Moody’s Analytics to Fortune</span></a> found that 96% of regional housing markets are overvalued, some by more than 30%.</p>
<p class="p2">Another <a href="https://fortune.com/2022/05/09/housing-bubble-watch-housing-markets-are-beginning-to-look-like-they-did-in-2007/"><span class="s1">analysis</span></a> by the Real Estate Initiative at Florida Atlantic University found that every one of America&#8217;s 100 biggest housing markets are overvalued.</p>
<p class="p2">There are still other analyses out there that predict that home prices will hold steady and may even increase in the next year.</p>

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