Home Sales Hit New Low as Mortgage Rates, Prices Remain High

U.S. home sales are likely to be the slowest this year since the Great Recession, as mortgage rates and high prices continue to constrain the housing market.

With only two and a half months until 2023, Redfin predicts that existing home sales will total 4.1 million this year. This is the lowest amount since 2008.

“Buyers have been in a tough spot all year,” said Chen Zhao, head of economic research at Redfin. new report. “High mortgage rates and still-high prices are making it harder than ever to buy a home.”

Another report from National Association of Realtors (NAR) According to , home sales fell 2% from August to September, and were down 15.4% when compared to September 2022. Home sales in September fell in every region of the United States except the Northeast.

Interest rates and housing market

The Federal Reserve’s interest rate hikes aimed at curbing inflation pushed mortgage rates to 7.63%, making it more expensive for most Americans to buy a home.

In theory, the benefit of higher mortgage rates is that there is less competition in the housing market, leading to lower prices. However, housing prices have not fallen.

Redfin reports that current market conditions result in an insufficient supply of homes for sale as owners are reluctant to sell. Many potential sellers probably don’t want to part with a fixed-rate mortgage that is well below the rate they can secure to buy their next home.

Inventory shortages keep the market competitive, and home prices remain high despite falling demand. According to Redfin, the median sales price for the four weeks ending Oct. 15 was $369,250, which is 2.5% higher than the price a year ago, and NAR data also shows home prices are rising. It shows that there is.

“Home prices have increased year-on-year for three consecutive months, underscoring the urgent need to expand housing supply,” said Lawrence Yun, the association’s chief economist.

Salary needed to buy a new house

In a separate report earlier this week, Redfin reported that he now has a salary of $115,000. There is plenty of room for median housing prices. In the United States. This is a 15% increase over the past year and a staggering 50% increase compared to the beginning of the pandemic. The average monthly mortgage payment recently reached an all-time high of $2,866, up from $2,395 a year ago.

Amidst many gloomy circumstances, there is some optimism for potential home buyers who have been kept out of the market, or who simply want to wait for the situation to improve before making an offer. There are several reasons.

Home listings are down 14% from a year ago, but rose slightly this fall, giving buyers more choice and potentially relieving some price pressure, according to Redfin.

It’s also starting to look more likely that the Fed won’t raise rates again this year. While there’s always the chance that inflation will continue and higher interest rates will be needed, this could be good news for those in the mortgage market.

Money details:

Best Mortgage Providers of 2023

Can we solve the affordable housing crisis caused by vacant office buildings?

9 Best Home Equity Loans for October 2023