Homebuyers grappled with an increasingly challenging housing market in August, as revealed by data from the National Association of Realtors (NAR). Existing home sales saw a 0.7% dip from the prior month, marking the third consecutive monthly decline, culminating in an annualized rate of 4.04 million. This figure stands as the third slowest pace witnessed in the current housing cycle.
A significant factor adding to the strain for buyers and sellers alike has been the sustained 30-year mortgage rate, which has remained above 7% for a continuous five-week span. The impact of these escalating rates has left numerous homeowners hesitant to part with their properties, reluctant to forfeit their lower interest rates.
Supply remains a pivotal issue influencing the market’s dynamics. The NAR disclosed that by the close of August, a mere 1.1 million units were available for sale, significantly below the six-month threshold required for market equilibrium. This shortage has exerted upward pressure on home prices, culminating in a historic median price of $407,100 for all housing types in August.
Recent projections from the Federal Reserve have further underscored the expectation of elevated rates persisting for the next three years. While mortgage rates aren’t directly tethered to fluctuations in the Fed funds rate, they traditionally shadow the yield of the 10-year Treasury, which has shown an upward trajectory in tandem with Fed rate hikes. This forewarns of even more challenging times ahead for prospective homebuyers, as higher mortgage rates are likely to translate to fewer successful transactions. Chief economist of the NAR, Lawrence Yun, cautioned that an escalation to 8% could potentially precipitate another downturn in home sales.
In August, the housing market presented daunting challenges for homebuyers, with rising mortgage rates and a scarcity of available properties creating a less enticing landscape for potential homeowners and sellers alike; absent compelling new data, these trends seem set to endure. In the absence of compelling new data that might prompt a reassessment of the outlook, it appears that the current trends are poised to persist in the foreseeable future.
Source: Yahoo Finance
