Home News New home sales drop in September after mortgage rates jumped [Video]

New home sales drop in September after mortgage rates jumped [Video]

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New single-family home sales fell in September, despite a rebound in the previous month, as homebuyers continue to shy away from rapidly rising mortgage rates.

Volume, at a seasonally adjusted annualized rate of 603,000, was down 10.9% from the previous month’s revised pace of 677,000 and 17.6% below last year’s level. The Department of Housing and Urban Development and the Census Bureau reported on TuesdayThe figure beat Bloomberg’s consensus forecast of 580,000 new home sales for the year.

Still, the decline in new home sales highlights the rapid shift in the market from pandemic-induced frenzy to recession-induced turmoil. Buyers are now facing a triple whammy of inflation, rising house prices and rising mortgage rates that are eating into their budgets.

“Sales continue to trend downward due to high interest rates and declining affordability, especially for first-time buyers,” said Robert Dietz, chief economist at the National Association of Home Builders. Sales are down almost 14% in 2022. Sentiment among builders has fallen for the 10th straight month, so the decline in production is expected to continue through 2023.”

A construction worker carries materials during work on a house under construction on a residential complex in Petaluma, California, on March 23, 2022. New single-family home sales slowed in February as mortgage rates continued to rise and home prices continued to rise, according to a Department of Commerce report. (Photo by Justin Sullivan/Getty Images)

The Federal Reserve (Fed) raised its short-term benchmark fund rate by three-quarters of a percentage point to combat rampant inflation in September. This has pushed yields on 10-year Treasuries, which fixed mortgage rates tend to track.

This brought 30-year fixed-rate mortgages above 6% for the first time since 2008 in September, with interest rates rising one percentage point in four weeks to end the month at 6.70%.

But for many, the ability to buy a home died long before interest rates hit 6%. In August, housing affordability Worst level in 37 years Mortgage technology and data provider Black Knight reported when the mortgage rate was 5.89%.

The median selling price for new homes in September was $470,600, up from $436,800 reported last month. According to the report, the average selling price was $517,000, down from $521,800 reported in August.

“In today’s market, it’s often easier to rent than buy a single-family home. redfin, told Yahoo Money. “First-time buyers are the most impacted in terms of affordability, but I hear from agents in the field that even roving buyers are impacted. They are disappearing from the market.”

The report shows another sign that the housing market is cooling.

the number of previously owned home for sale According to the National Real Estate Association, the number fell to 1.25 million as of the end of September for the eighth straight month, down 2.3% from August and 0.8% from the previous year.

Homebuilder sentiment also falls 10 consecutive months in Octoberis the weakest level since 2012, except for two months in spring 2020 when the pandemic began.

New single-family housing starts fell 4.7% in September to an annualized rate of 892,000. National Association of Home Builders This is the lowest score since May 2020, reported earlier this month.

Redfin’s research found that approximately 60,000 home purchase deals were canceled in September, representing 17% of all deals that month.

Inventory levels aren’t likely to improve any time soon as home price cuts become more common and potential sellers abandon my higher rates.

“The seller’s market is not what it used to be,” Ma said. “Even if they could get a good deal on the purchase, they would probably have to take a much bigger loss on the sale, discouraging homeowners from moving up. We’ll have to wait and hope that spring might be a better time to move up or stay longer.

Gabriella is a Personal Finance Reporter at Yahoo Money. follow her on her twitter @__gabriellacruz.

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