Home News U.S. Home Prices Hit Record of $416,000 in June as Sales Continued to Slide

U.S. Home Prices Hit Record of $416,000 in June as Sales Continued to Slide

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U.S. housing market with record prices Rising mortgage rates Consider home sales and keep out potential buyers.

According to economists, slowing activity in the housing market has stopped the pandemic-induced rapid sales growth, is another sign of a slowdown and increases the risk of a recession.

According to the National Association of Real Estate Agents, the average selling price of existing homes rose to $ 416,000 in June, up 13.4% year-on-year, the highest since the record began in 1999.

At the same time, pre-owned home sales fell for the fifth straight month, declining 5.4% in June to reach an annual rate of 5.12 million, NAR said. This was less than the number of sales recorded for 2019 as a whole, before the Covid-19 pandemic spread in the United States.

Lawrence Yun, Chief Economist at NAR, said: “People who want to buy can simply be priced given the affordable challenges.”

Mark Zandi, chief economist at Moody’s Analytics, said the housing market has frozen as participants adapt to rising mortgage rates.

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“Buyers can’t figure out what the right price is,” he said. “Sellers don’t want to give up,” he said of the price he expected to sell a few months ago.

Housing stagnation could have another impact on economic growth that was already hampered by accelerated inflation. According to the Ministry of Commerce, first-quarter growth will shrink at a seasonally adjusted annual rate of 1.6%, with some economists expecting growth to decline again or slow down between April and June.

Following Wednesday’s home sales data, Goldman Sachs economists lowered their second-quarter economic growth forecast by 0.1 percentage points to a rate of 0.5 percent.

IHS Markit economists also lowered their forecasts by 0.1 percentage points. They currently predict that GDP will decline by 2% in the second quarter.

The Department of Commerce will release second quarter growth data on July 28th.

According to realtors, nearly 15% of home purchase contracts pending in June failed, the highest level since April 2020, when the pandemic disrupted the market.

Redfin Ltd.

Phil Mount, a real estate agent in Boise, Idaho, said: “People are nervous, so I’m not buying now.”

Despite the projected chill in the housing market in 2022, mortgage rates have skyrocketed in recent months, and US home prices are still at record highs. WSJ’s Dion Rabouin explains what is driving demand, evidence of a slowdown in the horizon, and what that means for the economy.Photo composition: Ryan Trefes

Despite rising prices, homes are still selling rapidly, suggesting that demand remains resilient for now. The property remained on the market for 14 days in June, the lowest record dating back to 2011. Inventories of homes for sale are increasing, but remain low due to the three-month supply of unsold homes. Total inventory at the end of June was close to 1.26 million units, an increase of 9.6% from May.

However, housing demand may decline in the coming months. In another report on Wednesday, the Mortgage Banking Association said mortgage applications fell by a seasonally adjusted 6.3% from the previous week to the week ending July 15 for the third consecutive decline.

Mortgage applications are currently at the lowest level in 22 years.

The average interest rate on a 30-year fixed rate mortgage is 5.51% of the week ended last ThursdayIncreased from 2.88% year-on-year, according to housing finance institutions

Freddie Mac..

The rise in borrowing costs is partly due to the Federal Reserve’s aggressive raising of interest rates to cool inflation, which reached 9.1% in June. Best in over 40 years.. The Federal Reserve raised interest rates by three-quarters percentage points in June. Largest increase since 1994..Staff May behave similarly At their meeting next week.

According to Oxford Economics, rising home prices and mortgage rates have boosted average monthly home payments by nearly $ 700, or 56%.

Kurt Rankin, senior economist at PNC Financial Services Group, said rising consumer prices could reduce consumer sentiment and undermine the ability to save down payments, so they could consider large-scale investments such as home purchases. States that can be low.

“Yes, homes are selling fast, but demand is clearly declining,” he said. He added that price increases should slow in the coming months.

The slowdown has made homebuilders more cautious and focused on new construction.

June housing starts fell 2% The Commerce Department announced on Tuesday a second consecutive year of decline to a seasonally adjusted annual rate of 1.56 million. Housing permits, which could signal future housing construction, fell 0.6% in June from the previous month.

According to analysts, builders are now focusing on selling already completed homes rather than building more.

According to the National Association of Home Builders, the builders’ confidence index fell for the seventh straight month, reaching its lowest level since May 2020 in July.

As the rate rises, some buyers Choose a floating rate mortgageOffering low interest rates early in the loan, or making more upfront payments to lower interest rates.

Eddie Doyle, 26, took out a floating rate mortgage in June when she bought her first home in Fort Dodge, Iowa for $ 167,500. His mortgage carries an interest rate of 3.625% in his first decade.

“I paid a little more than I expected at home,” Doyle said. But, “In this town … if it’s affordable, it hasn’t been on the market for more than a week.”

Write in At David Harrison [email protected] And Nicole Friedman [email protected]

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