Mortgage rates hit their highest point since November 2008 this week, crushing demand from homebuyers.
Interest rates on 30-year fixed mortgages jumped to 5.89% from 5.66% the week before, according to the Reuters. freddie macInterest rates have risen nearly three-quarters of a percentage point in just three weeks and are more than 2.5 percentage points higher than at the start of the year.
Rising borrowing costs and inventory shortages have pushed inflation-hit homebuyers to the sidelines, and homebuyers who remain in the market are no longer in a rush to bid, forcing sellers to reassess their price expectations. I’m here.
“Mortgage rates have risen again as markets continue to manage a more aggressive monetary policy outlook to combat rising inflation,” said Sam Cater, chief economist at Freddie Mac. rice field.
Homebuyers wait for further home price declines
Demand for mortgages remained at its lowest level in 22 years through the end of August, according to the report. of the Mortgage Bankers Association Buying and refinancing activity continued to plummet in the week ending September 2nd. Nine of the last 10 weeks saw a decline in his purchasing activity, down 23% from the same week last year.
“Homebuyers are encouraged to stay on the sidelines in anticipation of falling home prices, which could further dampen home sales into the end of the year,” Fannie Mae chief economist Doug Duncan said in a statement. .
There are also signs that housing prices are softening.
The median house price is $435,000 According to Realtor.com, August saw $449,000, down from a June record of $450,000. The percentage of people who believe house prices will fall in the next 12 months rose to 33% in August, according to new data. fannie mae Housing sentiment survey up from 30% a month earlier.
Still, home prices remain 39.6% higher than in August 2019. With interest rates hovering around 5.50%, the median monthly payment for a typical home is over $2,000, about 61% higher than last year.
Vice President Robert Heck Morty, told Yahoo Money. “For homebuyers … interest rates may need to be lowered before short-term activity picks up again.”
seller cut price
As home sales have cooled, sellers have become more pessimistic about the outlook.
According to Fannie Mae, housing market sentiment hit an all-time low in August. Only 59% of sellers believe now is the time to sell, the lowest in the last two years, and 35% of her respondents said it’s a bad time to sell.
Across the country, home sellers have been forced to lower listing prices to attract buyers.Percentage of homes that have been discounted 19.4% In August, it was up from 11% a year earlier. According to Realtor.com, this is about his average level from 2017 to 2019.
“As house prices go down, buyers have a little more bargaining power or bargaining power and more options to buy a home. Heck said, “Home prices are so highly valued in some markets in the Sunbelt region that the pressure is finally easing for those looking to buy.”
At the same time, recent price cuts have made some sellers uneasy. As competition waned, new listings continued, down 13.4% year-on-year.
“Typically, we see a slowdown in late summer around Labor Day and a resurgence of activity in the fall, from September to December,” Mr. Heck said. “We are definitely at a point where we could see activity pick up a bit even if interest rates stayed the same. you know you can.”
Gabriella is a Personal Finance Reporter at Yahoo Money. follow her on her twitter @__gabriellacruz.