Home News High mortgage rates, declining budgets indicate home-price growth to slow in coming months

High mortgage rates, declining budgets indicate home-price growth to slow in coming months

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Homebuyers’ budgets are relatively flat compared to a year ago Driven by high mortgage rates.. However, new reports show that rising home prices are “peaking out and slowing in the coming months.”

According to an analysis of the average maximum budget set by Redfin.com users, the national budget increased by 0.3% over the three months to April 30 compared to a year ago. This figure shows the slowest growth rate since June 2020 and also shows that the budget is basically flat from this time in 2021.

Budgets haven’t fallen, but “the fact that budget growth has slowed significantly is one of the signs that home price growth will continue to slow over the years,” said Taylor Marr, Deputy Chief Economist at Redfin. He said.

Homes for sale in Geneva, Illinois, June 23, 2009. (Reuters / Jeff Haynes / Reuters photo)

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“When the mortgage rate goes up, Buyers’ budget goes down,“Mah said.

At higher rates, much of the buyer’s budget is devoted to interest payments. last week, 30-year fixed mortgage rates jumped from 5.09% to 5.23%According to Freddie Mac.

Home for sale

There is a “for sale” sign in front of a house for sale in Monroe, Washington, on the outskirts of Seattle. (AP Photo / Elaine Thompson, File / AP Newsroom)

According to Freddie Mac, this 30-year fixed mortgage rate last year averaged 2.96%.

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But “when the buyer’s budget goes down, the seller has to meet the buyer where they are,” Ma said.

In April 2021, the budget reached peak growth at a rate of 12.2%. It was three months before home selling prices reached a peak growth of 22.6% in July 2021.

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Similarly, Redfin economists predict that “buyers usually search online a few months before buying a home, so budget cooldowns will continue to cool down prices for a couple of months.” I am.

It takes time for sellers to adapt to the cooling market, but the data show that they are starting to react. In the last four weeks, 21% of sellers have already lowered their asking prices, up from 10% a year ago, according to Redfin.

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