Housing Market Crash Alert: Mark Your Calendars for Aug. 29

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Housing market crash concerns are swirling ahead of the S&P CoreLogic Case-Shiller Home Price Index report, due Aug. 29. Indeed, the upcoming housing data release will offer important insights into the fairly volatile housing market thus far this year.

What do you need to know ahead of the crucial real estate report?

Well, with 30-year fixed mortgages peeking over 7.49% for the first time since 2000, housing has been something of a hot topic on Wall Street. The housing market has had something of a topsy-turvy year.

After declines in home prices in late 2022 and early 2023, things have been on the rebound, at least according to the Case-Shiller. On a national level, home prices have been climbing since February, rising 0.7% month-over-month in May, the fourth straight month of gains.

The increase in home prices comes as a partial surprise to economists, who expected some deterioration in housing as a result of the Federal Reserve’s hawkish monetary policy and its effect on mortgage rates.

However, despite some early signs of weakness, home prices have held relatively steadfast. This is likely due to the country’s limited inventory of homes. As of July, the U.S. inventory of existing homes for sale stood at a 3.3-month supply, far below the 6-month supply considered normal.

When supply is low, even brutal reversals in demand can prove ineffective at lowering home prices. This has largely been the story this year, with existing home sales down more than 16% from last year while the nationwide median sale price continues to trend at $406,700, close to its all-time peak.

Will the Case-Shiller Show Signs of an Impending Housing Market Crash?

Despite the perceived strength in housing, fears of cooldown remain prevalent. Indeed, next week’s Case-Shiller will offer some much-needed insight into whether housing economists should expect the once-expected housing recession to truly manifest.

“This is quite a heated market, in a sense,” said Lawrence Yun, National Association of Realtors’ chief economist. “At least in terms of prices, it looks like the housing recession is already over.”

That said, it hasn’t been all peaches and cream. According to last month’s Case-Shiller, prices are still down 1% year-over-year in the 10-city index. In the 20-city index, prices were down 1.7% from last year.

Looking ahead, elevated mortgage rates pose an immediate roadblock to most would-be homebuyers. Some economists even speculate the 30-year may climb past 8% this year, the highest level since the 80s. However, assuming inventory doesn’t ease, this doesn’t necessarily mean you should necessarily expect prices to drop through the floor anytime soon.

“The fate of the housing market in the coming months will be dictated in part by the direction of mortgage rates, as well as the health of the broader economy,” said Mark Hamrick, Bankrate’s senior economic analyst. “The market could benefit from a combination of tailwinds, if they were to develop and are sustained, including easing inflation.”

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

With degrees in economics and journalism, Shrey Dua leverages his ample experience in media and reporting to contribute well-informed articles covering everything from financial regulation and the electric vehicle industry to the housing market and monetary policy. Shrey’s articles have featured in the likes of Morning Brew, Real Clear Markets, the Downline Podcast, and more.

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