Everywhere you look America's housing crisis is getting worse

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Everywhere you look America's housing crisis is getting worse
On a month-over-month basis, prices rose 2.3% in June. That's the same amount prices typically rise in an entire year. The Washington Post / Contributor/Getty Images
  • Home sales have slowed, but buyers who were waiting for prices to cool were out of luck in June.
  • Home prices surged at the fastest annual pace since 1979 as demand endured, CoreLogic said.
  • Rental prices leaped 2.5% in June, to well above the prepandemic trend, Apartment List said.

Housing prices got out of hand early this year, so Americans went on something of a strike.

They simply thought the deals weren't good enough, and home sales subsequently slowed from the frenetic pace seen earlier in the pandemic. But the market is still far from normal, and by many measures the affordability crisis is only getting worse.

The stark imbalance between the number of homes available and the number of people wanting to buy continued to lift prices at an astonishing rate into the summer. Prices rose 17.2% year over year in June, the housing-data company CoreLogic said Tuesday. That's the largest one-year increase since 1979, though the measure is somewhat skewed by the much lower prices seen earlier in the pandemic.

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On a month-over-month basis, prices rose 2.3% in June, CoreLogic added. That's how much prices typically rise in an entire year.

Read more: We are still in a housing crisis

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The market remains rife with prospective buyers and too few sellers. The rate of inflation risks pushing less wealthy Americans out of the market.

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"With plenty of cash on the sidelines, along with very low mortgage rates, prices are heading up, and affordability will become a more acute issue for the foreseeable future," Frank Martell, the president and CEO of CoreLogic, said in a statement.

The homebuying spree is bleeding into the rental market

Rents rose 2.5% from May to June and sit 11.4% higher than they were at the end of 2020, Apartment List said in a July 26 report. By comparison, rent growth from January to July averaged just 3.3% in the three years before the pandemic.

Everywhere you look America's housing crisis is getting worse
Apartment List

The recent surge in rental prices places costs "well ahead" of the growth trend seen in 2019, the Apartment List economists Chris Salviati, Igor Popov, and Rob Warnock said in the report. The price boom is taking place in "virtually every major market across the country," they added. And while rents remain below their prepandemic levels in 13 major markets, prices are rebounding quickly, according to the report.

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"As economic recovery continues to gain momentum, we may be seeing the release of pent-up demand from renters who had been delaying moves due to the pandemic," the team said. "Whereas last year's peak moving season was halted by the pandemic, this year's seasonal spike is more than making up for lost time."

UBS says there are reasons to be optimistic

While prices have leaped higher, spending should soften as inventory bounces back in the months ahead, UBS economists led by Ajit Agrawal said in a note Tuesday. That's already shown up in homebuyer sentiments, which soured through 2021 amid the historic price surge. Pending home sales also slowed, suggesting high prices are finally slamming the brakes on market activity.

Separately, the population shift from cities has started to fade, the team said. In the start of the pandemic, Americans moved away from cities and flocked to exurbs, areas more rural than suburbs that offer more space and cheaper housing.

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The trend slowed somewhat in May and June as reopenings led businesses to call employees back to their offices. That return to work should reverse out-migration from many cities and, in turn, cool booming demand in suburban and rural neighborhoods, the economists said.

Still, that reversal isn't likely to play out until the end of the year, according to UBS. Buyers, then, are best off staying patient as economists forecast weaker demand, rebounding supply, and a fizzling out of the exurban migration.

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