After a two-year frenzy during the COVID-19 pandemic, the housing market is showing signs of slowing down this spring and summer. Mortgage rates are rising and home loan applications are down year over year. The housing stock for sale is increasing and sellers are showing a greater willingness to lower their asking prices.
While there have recently been signs that the market is balancing, the past two years have seen unprecedented growth in property values to the benefit of current owners and developers. With low interest rates, homebuyers could borrow more money and pay more for homes. This sent prices to record levels. And as values soared, builders rushed to build homes: the number of units currently under construction is at its highest since the 1970s.
New home values had been rising steadily since the housing bubble collapsed and the Great Recession that followed in the mid-2000s. From a low of around $95 billion in 2009, the annual value of new housing nearly tripled over the next decade to $280 billion in 2019. However, that growth accelerated even further during the COVID-19 pandemic , with new units hitting $307 billion in 2020 and jumping to $380 billion last year.