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.
US home prices are rising again after five months of declines, reaching a record high for the month of July, due to low inventory and homeowners refusing to sell amidst high mortgage rates.
New home sales in the US increased by 4.4% in July, outperforming expectations and highlighting the continued demand for new construction due to a shortage of existing affordable homes. Despite rising mortgage rates, buyers are turning to new homes, causing a decline in sales in the resale market. However, as mortgage rates continue to rise, builder sentiment may be negatively impacted and prices may need to be adjusted to attract buyers.
The surge in mortgage rates has caused housing affordability to reach the lowest level since 2000, leading to a slow fall in the housing market and a potential dip in home prices, although the current market differs from the conditions that preceded the 2008 crash, with low housing inventory and a lack of risky mortgage products, making mortgage rates the key lever to improve affordability.
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.
The average U.S. home price has increased by 2.6% to $382,000 due to a lack of inventory, which has dropped more than demand, and significant declines in home prices have been seen in areas such as Austin, Detroit, and Phoenix, according to an analysis by Redfin.
The average long-term mortgage rate in the US climbed above 7%, reaching its highest level since 2001, making it more difficult for homebuyers to afford rising home prices and exacerbating the low supply of properties on the market.
Despite high interest rates, house prices in the US have not declined, leading to frustration and confusion in the housing market as buyers face fierce competition and limited inventory.
Zillow predicts that US home prices will continue to rise, with a 6.5% increase over the next 12 months, driven by tight inventory levels and high demand, while other firms like Moody's Analytics and Morgan Stanley believe there may be a decline in home prices by the end of 2024.
Home prices in the US climbed for the fifth consecutive month in June due to high demand, low supply, and increased mortgage rates, with the S&P Case-Shiller US National Composite home price index rising by 0.7% compared to May.
Pending home sales in the US rose by 0.9% in July, marking the second consecutive month of growth, despite high prices and increasing mortgage rates, with the rise attributed to an expanding job market and the potential for further increases given the number of failed offers; however, year-over-year pending transactions fell by 14%.
US housing inventory continues to be tight, with a 9.2% decrease in the number of homes for sale compared to last year, marking the fourth consecutive month of annual declines, although total inventory has shown monthly increases and is up 19% since January.
The recent downturn in global property prices is ending as average home prices are expected to fall less than anticipated and rise into 2024, according to a Reuters poll, due to factors such as high savings, limited supply, and rising immigration. However, this poses challenges for first-time homebuyers and rental affordability is expected to worsen.
Home prices in the US hit another all-time high in July, but month-to-month gains weakened and suggest a potential slowdown, likely due to rising mortgage rates and increased listings.
The number of homes for sale in the US continued to decline in August, down by 9.2% compared to the previous year and 45% below pre-pandemic levels, leading to higher home prices and affordability concerns.
Low inventory, high mortgage rates, and high prices have created a difficult housing market, making it challenging for house hunters to break into the market and leading to a substantial decline in purchases by real estate investors.
Average 30-year mortgage rates are still elevated at 6.94% in August, but they are expected to come down by the end of the year; however, a significant drop that will boost homebuying demand is not likely until 2024 or 2025, but there are advantages to buying a home even when rates are high, such as less competition.
Homebuilders are thriving due to a chronic shortage of existing housing inventory, leading to increased home prices and strong sales, according to KB Home CEO Jeffrey Mezger. The lack of inventory is also reflected in the significant drop in active home listings, with only Austin returning to pre-pandemic levels, while other markets have experienced substantial declines. Despite rising mortgage rates, the scarcity of existing inventory has prevented a steep national home price decline.
The housing market has experienced significant changes, with high mortgage rates and low inventory leading to slower sales and longer time on the market, but experts predict that mortgage rates will eventually decrease and home prices will continue to appreciate, with no imminent crash expected; the market is expected to shift towards a more balanced state in the next five years, and the suburban market is predicted to remain strong, particularly in areas with rising populations.
Demand for mortgages in the US has hit a 28-year low, with purchase applications falling to the lowest level since December 1996, despite a decrease in mortgage rates.
US mortgage rates have decreased slightly for the second consecutive week, but they remain above 7%, causing home affordability to reach its lowest level in nearly four decades.
The D.C.-area housing market is experiencing high interest rates, historically low inventory levels, and multiple offers, leading to a "dysfunctional" market for buyers and sellers.
The United States is experiencing inflationary pressures due to rising home prices and rental costs, posing challenges for homebuyers and renters, and potentially leading to broader increases in related services and inflation in other categories. Fed regulators are expecting deflationary trends in the future, but the interaction between housing data and the broader economy is crucial. The imbalance between supply and demand in the housing market needs to be addressed for prices to stabilize.
Mortgage payments in the US have reached a record high due to high mortgage rates and increasing home prices, causing pending home sales to decline by 12% year over year and pushing some buyers to the sidelines; however, sellers can still expect fair prices due to low inventory.
Manhattan renters may have reached their affordability threshold as median rents remain at a record high, leading to a decline in new leases and longer periods on the market, while landlords are hesitant to increase rents further; however, prices are unlikely to decrease significantly due to falling inventory levels and high demand.
Miami and South Florida have experienced the highest increase in consumer prices among large U.S. urban areas, driven largely by the housing market, with home rents increasing by 15.3% and the cost of buying a home rising by 14.3%.
Utah experienced a significant decline in housing prices from May 2022 to January 2023, with the statewide median sales price of existing homes falling 16%, marking one of the sharpest price declines in the state's real estate history; however, prices have shown signs of recovery since then. Rural counties in northern Utah and Washington County in southern Utah were among the hardest hit, while Summit and Wasatch counties saw the strongest price increases. Among Utah's largest cities, most experienced price declines, but Herriman and Draper saw increases.
Record-high mortgage payments and low home inventory are making the housing market historically unaffordable for Americans, with homebuyer demand and listings both experiencing significant declines.
Rent prices in the Bay Area, including San Francisco and Oakland, are declining for the seventh straight month, with a year-over-year drop of 4.3%, providing some relief for renters; however, low-income tenants still face significant affordability challenges.
Landlords are offering incentives to attract renters in the US housing market, even though the median asking rent is at a near-record high, with some landlords providing one-time discounts or a few months free to renters, which effectively lowers rents in certain areas, although this may not be reflected in asking-rent data. The rental vacancy rate has increased, leading to more vacancies for landlords to fill, and landlords are raising rents for existing tenants but not new tenants, in order to maintain high asking rents while strengthening returns. Demand for higher-end properties is declining, while more affordable units are in demand. The rental market varies across regions, with the West and South experiencing decreases in median asking rent, while the Midwest and Northeast have seen increases.
The Greater Boston housing market experienced a slow month in August, with home sales dropping to their lowest point for the month since 2010, primarily due to higher interest rates and a shortage of available homes for sale, leading to increased competition and higher prices for buyers.
Home prices in California reached a 15-month high in August 2023, attributed to rising mortgage rates and a shortage of homes on the market, but the market is expected to improve in the last quarter of the year as interest rates ease, according to the California Association of Realtors.
U.S. home price growth increased to 2.5% year-over-year in July, with Miami, St. Louis, and Detroit driving the growth, while 11 states saw annual home price declines, according to CoreLogic's latest home price index data. Rising mortgage rates and a lack of inventory are putting pressure on potential homebuyers, and pending home sales have seen slight upticks, particularly in the West and South regions.
Home prices continued to rise in August due to low inventory and high mortgage rates, causing a drop in home sales, according to a report from the National Association of Realtors.
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.
Home sales in the American Midwest defied the national trend by increasing in August, while sales across the country declined, due to high mortgage rates and low supply, according to data from the National Association of Realtors. Overall, home sales decreased by 0.7% in August and over 15% from the previous year, but analysts noted a stabilization in the market. The Midwest saw a 1% increase in home sales compared to July, but a more than 16% decline compared to the previous year.
