May 2022 is the first time since before March 2020 that total home sales in a month have returned to pre-pandemic numbers. That is significant. Before the pandemic began in March 2020, house sales were about 5.4 million per month. During March, April and May of 2020, those numbers dropped to almost zero as panic set in. But then the huge drop in interest rates spurred homebuyers and the buying frenzy began. Home sales jumped to as high as 6.6 million per month. It has stayed that way for the last 2 years. But now we are seeing sales coming back to where they were.
Will this slow the home appreciation? Maybe. Higher interest rates are definitely pricing some people out of the market, especially young buyers and first time home buyers. It is those young first time buyers that spur all house sales – someone wanting to sell their smaller home and upgrade need a first time buyer to buy that home so they can buy their next home. However, inventory remains low. Basic economics says if supply is low and demand is high, prices rise. In this case, maybe house prices will not rise much more, but it might keep them from coming down.