High-Interest Rates Drive 13% Slump in Upcoming Home Sales
As the busy summer real estate season transitions into the typically quieter fall, affordability is taking a major hit, according to Dana Anderson, a Data Journalist for Redfin. Mortgage payments are soaring to record highs, making the dream of homeownership increasingly elusive for many prospective buyers.
So, what are buyers doing in response? They’re adopting a “wait and see” approach, holding off on making any moves until either mortgage rates or home prices take a downward turn. Freddie Mac reports that current mortgage rates are at near two-decade highs. Although buyers were granted a temporary reprieve last week when the Federal Reserve decided not to hike nominal interest rates, the central bank did indicate that more rate increases are on the horizon. With rates projected to remain elevated through 2024 and even into 2025, it’s unlikely that home prices will come down anytime soon.
This suggests that buyers who have the financial means might consider diving into the market now, as waiting for a significant drop in housing costs could prove futile. The data already points to a cooling market; pending home sales have fallen by 13% compared to last year. Additionally, the total inventory of homes available for purchase has decreased by 16%, as many existing homeowners are choosing to stay in their current homes to capitalize on their lower mortgage rates.
On the flip side, for those considering selling, the current market landscape offers some incentives. Redfin notes that the number of new listings has started to stabilize, even showing a slight uptick since early September. While new listings are still down by 7% compared to the same time last year, this represents the smallest year-over-year decline since July 2022. Given that new listings were plummeting rapidly around this time last year, the current situation indicates some stability in the market. Homeowners contemplating selling could take advantage of this seller-friendly environment, characterized by elevated home prices and low inventory levels. In such a market, your home could stand out as one of the few options available to buyers in your area, potentially fetching a premium price.
In summary, while buyers are exercising caution due to skyrocketing rates and home prices, sellers are starting to see new opportunities emerge. Both parties are making calculated moves as they navigate a complex and evolving real estate landscape.
