US mortgage rates rose again to 7.14 percent this week after a small drop in late October, the highest rate the country has seen since 2001.
The US housing market has seen dramatic changes this year as the Federal Reserve tightened monetary policy in a bid to stifle inflation.
The overall measure of applications, including homeowner refinancing, is the weakest since 1997.
Despite the mortgage rate hike, applications to buy a home rose slightly 1.3 percent last week, according to data released by the Mortgage Bankers Association on Wednesday.
Due to the rising cost of fixed mortgage rates, more and more buyers have started looking for cheaper home financing options, such as adjustable rate loans.
Home sales remained down 33 percent in October year-over-year, but buyers seem a little more eager to join the search for a new home than they have in recent months.
“We are still deep in a market that is dealing with the pains of high mortgage rates,” said Taylor Marr, deputy chief economist at redfin.com.
As mortgage rates have risen and home prices have fallen, the US housing market has cooled off significantly since the height of the pandemic. October home sales prices are not yet available as the mortgage rate soared above 7% for a few weeks.
Home prices have cooled since August and continue to sell for less as mortgage rates soar to their highest in more than two decades.
The average sale price of a home is $403,556, 7.5% more than the previous year in the month of September, according to the technology-driven real estate brokerage.
The number of homes sold also fell 22.5 percent to just over half a million.
Those numbers trended lower as the market entered October.
The median home sale price in the US for the last month of October was $360,861, up 4% year over year, and the median mortgage payment was $2,424, up 48% from $1,703 in the month of October. last year, when the rate was 3.09%.
Sales are also down 50% in pandemic-thriving cities like Las Vegas, Miami and Phoenix; however, prices have not dropped.
In fact, prices in metropolitan areas only decreased year over year in San Francisco, Oakland, San Jose, and outside of California, Lake County, Illinois.
In other major metro areas, the median listing price of a home in October (other than sales price) rose year-over-year, but had fallen since September.
In Atlanta, the median listing price was $412,000, up 4.8 percent from October 2021. But down from $420,000 the previous month.
In Los Angeles, the median listing price was $940,000, an increase of 1.6 percent from October 2021. The median price was down $9,000 from September.
In Chicago, the median listing price was flat from September to October and soared 3.3 percent year over year.
Median listing prices are falling month-over-month, though largely remaining high year-over-year as buyers grapple with a significantly inflated mortgage rate.
Despite the low home sales figures, real estate agents in central parts of the country say they have seen an increase in first-time homebuyers and other budget-conscious buyers returning to the market to take advantage of its capacity. to be selective.
Despite the low home sales figures, real estate agents in central parts of the country say they have seen an increase in first-time homebuyers and other budget-conscious buyers returning to the market to take advantage of its ability to be selective.
They are taking the opportunity to be specific about their home feature desires and bidding lower than requested as the market adjusts to new rate realities.
This behavior is a reversal of homebuyers during the pandemic who say they regret buying high-priced homes that don’t match their priorities, including their preferred locations and quality of homes.
Home prices have risen 45 percent during the pandemic, and nearly 75 percent of those who bought homes during the surge regret their decision.
Despite some signs of strength returning to the market during the last week of October, activity in the home buying sector generally remains down 30 percent year over year.