High mortgage rates and tight inventory are slowing home sales in the D.C. region, leading to predictions of a slowdown in the housing market and the possibility of a market freeze if inflation and interest rates increase.
Canadian retail sales rose more than expected in June, indicating a rebound in activity, particularly in the motor vehicle and parts dealers, sporting goods stores, and gas stations sectors, while spending on rate-sensitive products like furniture contracted.
Mortgage rates topping 7% have led to a significant drop in mortgage applications for home purchases, with last week seeing the smallest volume in 28 years. The increase in rates, driven by concerns of high inflation, has priced out many potential buyers and contributed to low housing supply and high home prices. As a result, sales of previously owned homes have declined, and homeowners are reluctant to sell their properties due to the higher rates. Some buyers are turning to adjustable-rate mortgages to manage the increased costs.
The inventory of existing homes has been declining since the peak of the housing bubble in July 2007, with technology playing a key role in speeding up the processes involved in selling a home and reducing the time it takes for a home to sit in inventory.
Despite initial concerns, some malls in America have experienced a recovery from the pandemic-induced decline in consumer activity, with more stores opening than closing in 2022 and an 11% increase in sales, according to a report from Coresight Research. Mall occupancy rates have also increased, and traffic levels have risen, indicating a positive outlook for physical retail.
The United States housing market has seen a 21 percent decline in previously occupied home sales over the past year, continuing the slowdown caused by rising interest rates, while prices continue to rise despite the decrease in sales, leading to a shortage of affordable homes and worsening home affordability for the foreseeable future.
The rise in housing prices over the past three years can be attributed to a shortage of supply, low volume in the market, and the introduction of mortgage rate buydowns; however, there is now a risk of too much inventory being introduced into the market, and a potential decline in mortgage rates could lead to a large amount of existing homes being sold and a subsequent oversupply.
Pending home sales in the U.S. plummeted due to high mortgage rates, deterring buyers and sellers from making deals, exacerbating the ongoing inventory shortage and driving up home prices.
The fall housing market is experiencing a decrease in home sellers and a limited inventory, leading to high prices and limited affordability, although there is some potential for buyers to find more reasonably priced homes.
