Home sales have plummeted as mortgage rates soared, and sellers are now rushing into the market before the fierce market cools dramatically.
According to Realtor.com, last week’s supply of homes for sale increased 9% year-on-year. This is the company’s largest annual profit since it began tracking indicators in 2017.
Real estate brokerage Redfin It is also reported that the number of new listings has nearly doubled in the four weeks that ended on May 15. Just like the same period a year ago.
There is a sign for sale in front of the house in Washington, DC.
Stephanie Reynolds | Afp | Getty Images
“The rise in mortgage rates has changed the home market and now homeowners are rushing to find buyers before demand further weakens,” said Darryl Fairweather, chief economist at Redfin.
Sellers are clearly seeing a softening of the market. Pending home sales, an indicator of existing home contracts, fell by nearly 4% from March to April. According to the National Association of Real Estate Agents, it has decreased by more than 9% since April 2021. This index measures signed contracts for existing homes rather than closures, so it could be the most timely indicator of how buyers are reacting to rising mortgage rates. .. This is the sixth straight month of sales decline and the slowest pace in almost 10 years.
April sales of new homes, as measured by the same signed contract, were much higher than expected, down 16% compared to March. According to the U.S. Census..
Sales have been sluggish as mortgage rates have risen sharply since the beginning of the year and showed the highest growth in April and early May. Average interest rates on 30-year fixed mortgages started near 3% and are now well above 5%.
Lindsay Katz, Redfin’s real estate broker in the Los Angeles area, said: “Now I’m looking at homes, 2 to 6 offers to good homes.”
Katz worked with Alexandra Stocker and her husband to sell their home. Stockers were already worried that the red-hot housing market was suddenly chilling.
“We talked a lot about it. For example, are you making a mistake here? Are you missing a boat? Everything collapsed in the next three months and you didn’t sell your house earlier this year. Are you going to kick yourself for the sake of it? “Alexandra Stocker said.
House prices have risen steadily in the first two years Covid pandemicThe fall in mortgage rates has largely offset these increases.
Example: In May 2019, a buyer who buys a $ 300,000 home with a 20% down payment and a 30-year fixed mortgage will get an average interest rate of about 4.33%. The monthly payment for principal and interest will be $ 1,192. In 2020, the price of the same home went up by 5%, but the mortgage rate dropped to 3.41%, so the actual monthly payments dropped to $ 1,119.
By 2021, monthly payments had increased by only about $ 100. This month, prices rose another 21%, mortgage rates soared to about 5.5%, and monthly payments reached $ 1,991. That’s about $ 800 a month more than in 2019.
Home sellers sat in the driver’s seat just six months ago, but now they are much less competitive with their buyers. Redfin’s demand index, which measures demand for home tours and other home-buying services, fell 8% year-over-year in the week ending May 15. This was the largest decline since April 2020, when the pandemic suspended most home-buying activities.
“I met a seller who sells in June in February, but the conversation in February is very different from the conversation in June because the market has changed completely,” Katz said.
Stockers are excited that they listed their homes when they did. They are leaving California and building a home in Washington.
“I’m joking that I might get out of here at just the right time,” said Alexandra Stocker. “I don’t want to wait anymore”
Correction: According to the US Census, April sales of new homes, also measured by a signed contract, were much lower than expected by 16% compared to March. The previous version was wrong for a month.
