Home price records and rising mortgage rates in May made home purchases the most expensive month since 2006, putting more buyers up and pressured sellers to lower their asking prices.
The National Real Estate Agents Association’s Home Purchaseability Index fell to 102.5 in May, the association said Friday. This is the lowest level since the index fell to 100.5 in July 2006. 100.2. The Affordable Index incorporates the median existing home prices, median family income, and average mortgage rates.
On a nationwide basis, home purchases were relatively affordable in 2020 and last year due to record low mortgage rates, despite strong mortgage demand and soaring home prices. .. But this year, mortgage rates have skyrocketed, House prices have risen to new highs Whole country.
Mark Fleming, Chief Economist, said:
Affordable price drops make it Especially difficult for first-time homebuyers To enter the market, economists say. Home ownership has long been an important way to build wealth for the American middle class.
According to NAR, regular monthly mortgage payments increased to $ 1,842 in May, assuming a 30-year fixed rate mortgage and a 20% down payment, $ 1,297 in January and 1,220 in May 2021. Increased from the dollar.
Mortgage rates have fallen in the last two weeks. However, affordability is likely to worsen in the coming months, as rising house prices are expected to outpace income growth, said Lawrence Yun, chief economist at NAR.
The housing market has cooled significantly In the last few weeks as buyers have retreated from the market. Sales of pre-owned homes in May decreased for the fourth straight month. According to realtors, some buyers are disqualified from mortgages, while others don’t want to pay hundreds of dollars a month compared to their budget just a few months ago.
A sharp drop in demand is expected to slow home price growth by the end of the year, with some economists predicting price declines.
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Robert Dietz, Chief Economist of the National Home Construction Association, said:
More sellers have lowered asking prices in recent weeks, especially in the housing market, which has recorded the sharpest price increases in recent years, including Boise, Idaho.Phoenix; and Austin, Texas, according to a real estate agent
But nationally, many economists say home prices can continue to rise due to the generally low inventory of homes for sale. According to Realtor.com, the number of active lists in June was down 34% from June 2020 and down 53% from June 2019.
He is the parent of The Wall Street Journal and runs Realtor.com.
Dalton and Lacy Lyons saw a market slowdown first-hand when they went to buy a home near Denver. They started looking for a home in April and offered five more than the list price, but lost to other bidders.
Market competition was chilling when we found an unfinished three-bedroom home in Castle Rock, Colorado in June. The seller accepted the offer at the asking price of $ 555,000 and agreed to pay the closing price of $ 2,500.
But a less competitive market did not mean a cheaper market. As mortgage rates went up, Lions had to cut their budgets.
“We are very excited,” said Lions. But “what’s really disappointing is that if you were shopping six months ago, you would have looked like a $ 700,000 home, as the price was.”
According to mortgage lenders, the average interest rate on 30-year fixed-rate mortgages this week was 5.3%.
This was a significant decrease from 5.7% last week, but an increase from 2.9% a year ago.
Mortgage rates have been largely below 5% since the recession of 2007-2009.Many millennials in recent years Aged in the year of their major home purchaseAnd the Covid-19 pandemic turned over Where many Americans want to live..Demand for second home Soared during a pandemicAnd investors Flocked to the market to buy a house to rent a house Because the rent has gone up.
Jason Roberts began shopping for his first home in Sacramento, California earlier this year, with an estimated 3.75% mortgage rate. With mortgage rates rising by nearly 6%, he offered two homes before deciding to leave the home search in April.
“Now you have high prices and high rates,” he said. “I want to buy it, but the market is ridiculously high.”
Write to Nicole Friedman [email protected]
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