Here’s Why the Housing Market Is Cooling Off and Why It’s OK | Pound Ridge Real Estate

There is evidence that the real estate market is reaching an equilibrium.

Movoto Real Estate’s August State of the Real Estate Market report showed that the median cost per square foot for a home in the United States increased by 14.9 percent in July compared to July 2012, while inventory fell by close to 16 percent year over year. At the same time, the average list price per square foot remained flat with June’s figures, and the number of homes for sale increased on a month-over-month basis.

That the list price did not increase between June and July indicates that the inventory supply has begun to catch up with demand. “Going forward, we expect prices to continue to move laterally on a month-over-month basis,” report says. “Higher mortgage rates and increased inventory will keep prices from increasing at the same pace we saw in the first half of the year.”

The average interest rate for a 30-year fixed-rate mortgage edged higher to 4.61 percent for the week ended August 2, compared to 4.58 percent in the week before. “For the first time this year, the price did not increase, which could be a sign that the market is loosening and their buying power could increase,” the Movoto concludes.