America’s property FREEZE: Pending home sales fall to their lowest level on record, declining at a faster rate than during the 2008 housing collapse
Home sales fell to their lowest level on record in October, falling faster than during the 2008 housing crisis, new figures show.
The National Association of Realtors (NAR) Pending Home Sales Index shows that the number of transactions fell by 1.5 percent in a month. Over the year, this means that turnover fell by 8.5 percent.
It brought the NAR index down to 71.4 out of 100 β the lowest figure since its inception in 2001. An index of 100 indicates that it is equal to the level of activity at the turn of the millennium.
Rising mortgage rates and still high house prices have made the American real estate market cold.
The average deal on a 30-year fixed-rate mortgage fell slightly this week to 7.22 percent, down from a high of nearly 8 percent in October, according to the latest data from Freddie Mac. But most buyers signed a loan when interest rates were at record lows, making them reluctant to move.
Home sales fell to their lowest level on record in October, falling faster than during the 2008 housing crisis, new figures show
NAR chief economist Lawrence Yun said: βIn October, mortgage rates were at their highest point, and contract signings for existing homes were at their lowest level in more than two decades.
The successive declines in mortgage rates in recent weeks will help more homebuyers qualify, but limited housing inventory significantly prevents housing demand from being fully satisfied.
'Multiple bids obviously only result in one winner, the rest can continue their search.'
But the picture varies in the US. Sales in the West fell 6 percent, while in the Midwest and South they fell 0.4 percent and 1.9 percent, respectively.
Only the Northeast saw a 2.7 percent increase in transactions.
Pending sales are defined as the moment when the contract has been signed, but the transaction has not yet been completed. The NAR says current contracts are good early indicators of upcoming sales closings.
However, the report noted that homes priced above $750,000 were a sweet spot in the market, with experts saying they were seeing a spike in sales.
New-build home sales are also up 4.5 percent so far this year, thanks to an increase in the number of homes under construction.
Buyers are currently facing one of the least affordable housing markets in recent memory.
Two years ago, home loan rates hovered at 3.10 percent β ββless than half of where they are today.
Buyers are currently facing one of the least affordable housing markets in recent memory, thanks to rising mortgage rates and still-high prices
It comes after US home prices hit another record high in September, rising for the eighth straight month
In real terms, this means that someone buying a β¬400,000 house in November 2021 would pay around β¬1,623 per month for their mortgage. This analysis assumes a 5 percent down payment.
But the same buyer today faces monthly payments of $2,585 β more than $1,000 extra.
It comes after US home prices hit another record high in September, rising for the eighth straight month.
Prices rose 0.7 percent from the previous month, according to the S&P CoreLogic Case-Shiller US National Home Price Index β the main measure of US home prices.
It means properties are up 3.9 percent year-over-year, Case-Shiller data shows. It's an acceleration of price increases since August, when the average U.S. home rose 2.6 percent year over year.
“While the rise in mortgage rates this year has certainly depressed the number of homes sold, the relative shortage of inventory for sale has been a strong support for prices,” S&P's Craig Lazzara said in a statement.