Home News New home sales unexpectedly climb in October despite steep mortgage rates

New home sales unexpectedly climb in October despite steep mortgage rates

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House prices soared, mortgage interest rate What hasn’t been seen in over a decade has quickly eroded affordability.

Purchases of new single-family homes rose 7.5% to reach a seasonally adjusted annual rate of 632,000 units, the Department of Commerce reported Wednesday. Economists surveyed by Refinitiv had expected new home sales, which make up a small percentage of total sales, to fall 5.5% last month.

On an annual basis, new home sales are still down 5.8%.

The median new home price in October was $493,000, up nearly 15.4% from the same period last year. Again he has increased by more than 8% since September. About 470,000 new homes were on the market at the end of October, up slightly from the previous month, according to the report.

Impact on the middle class

A For Sale sign stands in front of a home in Westwood, Massachusetts, on October 6, 2020. (AP Photo/Steven Senne, Files/AP Newsroom)

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“The surge in mortgage rates this year has had a big impact on middle-class homebuyers,” said Holden Lewis, a home and mortgage expert at NerdWallet. In October, 48% of new homes sold for $500,000 or more, compared with 33% a year ago.”

The interest rate sensitive housing market of the Federal Reserve An aggressive campaign to tighten monetary policy and slow the economy. Policymakers have raised the benchmark Fed Funds rate six consecutive times, including four 75 basis point hikes in June, July, September and November, pushing inflation still near 40%. No signs of pausing while trying to squash. best of the year. Basis points are hundredths of a percent.

average rate of 30 year fixed mortgage Mortgage lender Freddie Mac’s latest data released on Thursday showed it fell to 6.58% in the week ending Nov. 23, down from 6.61% in the previous week. That’s significantly higher than just a year ago when interest rates were his 3.10%, but down from his peak of 7.08%.

Sale of existing homes

US housing

This aerial view shows new homes completed and under construction at the Trappe, Maryland site on October 28, 2022. (Jim Watson/AFP via Getty Images) / Getty Images)

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Rapidly rising borrowing costs, coupled with high home prices, pushed many entry-level homebuyers out of the market

a Another report released last week It marked the ninth straight month of slowdown in existing home sales.

Data released on Friday by the National Association of Realtors (NAR) showed existing home sales fell 5.9% from the previous month in October to an annualized rate of 4.43 million units. According to Refinitiv, this is slightly above economists’ expectations.

Federal Reserve Chairman Jerome Powell

US Federal Reserve Chairman Jerome Powell speaks at a press conference on interest rates, the economy and monetary policy actions at the Federal Reserve Building in Washington, DC, June 15, 2022. (AFP/Getty Images via Olivier Dulriery/Getty Images)

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On an annual basis, home sales plunged 28.4% in October.

“As mortgage rates rose, more homebuyers were at risk of losing their mortgage eligibility in October,” NAR chief economist Lawrence Yun said in a statement. “The impact will be greater in higher-priced areas of the country and in markets where house prices have risen significantly in recent years.”

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