Home sales in September fell to their lowest level on record, new data show, as mortgage rates hit a 20-year high and inflation eats into existing savings.
New data from red finwhich boasts of running the nation’s number one real estate brokerage site, published on Wednesday the scale of the slowdown, which had been widely predicted.
The number of homes sold in September decreased 22.8 percent year over year, with 499,941 deals closed compared to 647,413 in September last year.
The 30-year national average fixed-rate mortgage rate was 6.1 percent, up from 2.9 percent last year, and has only increased since then.
Redfin announced on Wednesday that home sales for September were at their lowest rate
Mortgage rates have more than doubled since last year, hitting a 20-year high last week, according to data released Wednesday by the Mortgage Bankers Association.
The 30-year fixed rate rose to 6.94 percent in the second week of October, from 6.81 percent the previous week.
Redfin also reported that sellers were reconsidering, amid the market gridlock: New listings fell 22 percent last month, marking another grim record for the biggest drop in history, excluding the pandemic months of April and May. of 2020.
“The US housing market is at a standstill again, but the driving forces are completely different from those that caused the stagnation at the start of the pandemic,” said Chen Zhao, head of economic research at Redfin.
‘This time, demand is slumping due to rising mortgage rates, but prices are being propped up by inflation and a drop in the number of people putting their homes up for sale.
“Many Americans are staying because they already moved and got a very low mortgage rate during the pandemic, so they have little incentive to move today.”
The median US home price rose 8 percent year over year in September to $403,797.
Mortgage buyer Freddie Mac reported on Oct. 13 that the 30-year average key rate rose to 6.92 percent from 6.66 percent last week.
Meanwhile, more than 60,000 purchase agreements were canceled last month, which is equivalent to 17 percent of the homes that were contracted.
The biggest falls in home prices were in New Orleans, where they fell 5.7 percent.
Two California cities, Oakland and San Francisco, ranked second and third, with declines of 2.1 percent and 1.9 percent, respectively.
Boise, Idaho, experienced the largest price declines in the entire metro area, with more than two-thirds (67.8 percent) of homes for sale reducing their prices in September.
El Paso, Texas, saw the most growth in prices, which were up 23 percent year over year to $245,950.
Then came West Palm Beach, Florida, where prices rose 22.2 percent; Greenville, South Carolina (19.3%); and Miami (17.6%).
Zhao said he expects market conditions to get worse before they get better.
“With inflation still rampant, the Federal Reserve is likely to continue raising interest rates,” Zhao said.
“That means we may not see a decline in high mortgage rates, the number one killer of housing demand, until early to mid-2023.”
An average American family earning $71,000 can now only afford a one-bedroom, one-bathroom apartment in Manhattan at the new rates, but could have afforded a three-bedroom apartment at the old mortgage rates.
An average American family earning $71,000 can now only afford a one-bedroom, one-bathroom apartment in Manhattan at the new rates, but could have afforded a three-bedroom apartment at the old mortgage rates, Zillow listings show.
In Los Angeles, the average American family could afford a two-bedroom, two-bathroom RV at current rates, but would have been able to purchase a two-bedroom, two-bathroom, 1,549-square-foot condo with a pool in January.
In San Francisco, an average American family can afford a 753-square-foot one-bedroom, one-bathroom condo, but would have been able to afford a larger, more modern condo at the above rates.
Meanwhile, in Los Angeles, the average American family could afford a two-bedroom, two-bathroom RV at current rates, but would have been able to purchase a two-bedroom, two-bathroom, 1,549-square-foot condo with a pool in January.
And in San Francisco, an average American family can afford a 753-square-foot one-bedroom, one-bathroom condo, but would have been able to afford a larger, more modern condo at the above rates.
Homebuyers are now turning away from those expensive cities, George Raitu, a senior economist at realtor.com he said, noting that sales have increased in the Midwest and Northeast.
In Chicago, for example, the average family might be able to afford a 1,000-square-foot, two-bedroom, two-bathroom condo, while in Portland, Maine, they might be able to afford a four-bedroom home.
