Signed contracts to buy previously owned homes in the US plummeted more than expected in August. rising mortgage interest rates Rising home prices continued to push entry-level homebuyers out of the market.
The National Association of Realtors announced Wednesday that its Pending Home Sales Index fell 24% in August compared to the same month a year ago. On a monthly basis, pending home sales he fell 2%. That’s well above his 1.5% decline predicted by economists at Refinitiv.
Lawrence Yun, chief economist at the NAR, said, “Mortgage interest rates are the driving force behind home purchases, and the highest interest rates in a decade are having a serious impact on contract signings.” If it goes down and the economy continues to add jobs, home buying should stabilize.”
The once red-hot housing sector is in the midst of a serious correction. federal reserve We are raising interest rates at the fastest pace in decades.
of federal reserve Following similar hikes in June and July, the benchmark rate was raised by 75 basis points for the third straight month in September. This is his most aggressive series of rate hikes since 1994. The move puts the main benchmark federal fund rate in the 3% range to his 3.25%, its highest since the pre-financial crisis of 2008. It’s also his fifth consecutive price increase this year.
In addition to the significant rate hikes, Fed officials have signaled an aggressive rate hike policy for the rest of the year. In new economic forecasts released after the two-day meeting, policymakers expect interest rates to reach 4.4% by the end of the year, suggesting a further three-quarters percentage point increase is under consideration. increase.
Mortgage rates have more than doubled to 6.29%, and may continue to rise, according to recent data from mortgage lender Freddie Mac. And while home price gains have slowed this past month, prices are still well above what they were just a year ago, making affordability within reach for many prospective buyers. It has become nothing.
new construction sales August saw an unexpected spike, with new single-family home purchases soaring nearly 29%. But many economists said the unexpected rise was an anomaly, deterring buyers’ efforts to lower mortgage rates as the average 30-year fixed rate fell from its previous high to nearly 5%. I think it’s just a representation.
Bill Adams, chief economist at Comerica Bank, said: “New home sales in August far exceeded expectations as homebuilders slashed prices and mortgage rates were slightly lower than they were in June and July. ‘ said. “August’s unexpected rise in home sales is unlikely to be repeated as mortgage rates hit another all-time high after the Federal Reserve’s decision in September.