Data from Goldman Sachs (GS) shows housing slump is decreasing in the US. The investment bank revealed that four cities out of the 25 largest metropolitan areas grapple with an oversupply of houses.
According to their recent data, the overall housing inventory of these four cities is seeing more homes for sale compared to January 2020. The firm predicts that by the fourth quarter of 2024, home prices in Austin, Phoenix, San Francisco, and Seattle will decrease by 19%, 16%, 15%, and 12%, respectively.
Goldman Sachs said the declining home prices in the market could be attributed to the migration of people to areas with low expenses and massive layoffs. (Photo: New York Post)
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Goldman noted that the west coast and southwest are hit with an oversupply which reflects the local challenges in the area, such as poor levels of affordability of houses. Yahoo! Finance reports migration has also increased due to tech layoffs, and the pandemic-fueled massive exodus of residents is another reason for the drastic decrease in home prices in those cities.
Meanwhile, the housing market is less dire at a national level. The firm expects home prices to decline by 6.1% in 2023 as mortgage rates increase by 6.5%. However, the bank cautioned that there is a potential risk as the housing supply remains low despite the ongoing construction of houses onto the market.
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The Commerce Department said builders continued slowing home construction as of January. Housing construction decreased by 4.5% to 1.31 million annualized rates. The National Association of Realtors also notes that existing home sales are decreasing, but the government data show an unexpected rise in new home sales.
Goldman Sachs views the gradual recovery of home sales as a positive indication for the year’s second half, which would act as an additional buffer.
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