Housing markets in parts of the Midwest and the East Coast are showing resilience even as home prices fall across the country, according to findings released by real estate firm Redfin.
Of the 100 most populous US metro areas, the housing market in Lake County, Ill., cooled down the least from February to August of this year, according to Redfin’s analysis published Tuesday.
That period coincided with a spike in long-term mortgage rates, which are now approaching 7% as the Federal Reserve steadily hikes its benchmark interest rate.
Albany, NY, ranked second among metro areas that have shown the least deterioration in market conditions, followed by Chicago; New Haven, Conn.; and Milwaukee.
The areas at the top of the list share a common theme of affordability, with eight of the top 10 housing markets reporting median home prices that trail the national level. As a result, those markets are less susceptible to the cooling effects of rising mortgage rates.
Housing markets at the top of the list reported price increases during the pandemic-era buying surge but are “still affordable compared with the rest of the country,” Redfin senior economist Sheharyar Bokhari said in a statement.
“They’re slow to feel the impacts of economic headwinds like inflation and the Fed raising interest rates because the relatively affordable home prices make them attractive to house hunters seeking deals, and homes are already priced low enough that there’s not much room to fall,” Bokhari added.
Redfin notes that nine of the top 10 spots belonged to areas in the Midwest or along the East Coast. The firm previously said that housing markets in the lower third of the country, known as the Sun Belt, are seeing the worst effects of the current housing slowdown.
“There are still plenty of buyers looking for homes; many of them are people who didn’t stand a chance in last year’s competitive market but are relieved to see lower prices and fewer bidding wars,” said Chicago-based Redfin agent Ashley Arzer. “They’re willing to purchase a home despite rising rates because they finally have a window of opportunity to get an offer accepted.
To determine which housing markets have cooled the least, Redfin ranked metro areas based on their median sale prices as well as year-over-year price drops, pending sales, sale-to-list ratios and the share of homes that were off the market within two weeks of listing.
As The Post reported earlier this week, US home price growth decelerated at its fastest annual clip on record for the 12 months ending in July, according to the latest S&P CoreLogic Case-Shiller Index data.
On a monthly basis, home prices declined from June to July – and many experts are warning that prices will continue to fall into next year.
Federal Reserve Chair Jerome Powell acknowledged the housing market was in the midst of a reset – a trend he argued would improve conditions for buyers in the long term.
“From a sort of business cycle standpoint, this difficult correction should put the housing market back into better balance,” Powell said.