US Interest Rates: Higher Interest Rates Hit Home Prices Again

US Interest Rates: Higher Interest Rates Hit Home Prices Again

Existing-home prices in the United States fell by the most in more than 11 years last month, as increasing interest rates continued to impact on the housing market.

Higher Interest Rates Hit Home Prices Again: US Interest Rates, According to the National Association of Realtors, the national median existing-home price declined 3.1% year on year in May to $396,100, the greatest drop since December 2011.

The National Association of Realtors said Thursday that existing-home sales climbed 0.2% from the previous month to a seasonally adjusted annual pace of 4.3 million. May sales were down 20.4% year on year.

The housing market has slowed in the last year and a half as mortgage rates have driven many purchasers out of the market and urged homeowners with low mortgage rates to stay put. Since the beginning of 2022, existing-home sales have dropped by around one-third.

Following a period of rising property prices caused by the pandemic, the housing market has stabilised into a period of dropping prices. May was the fourth consecutive month of yearly price reductions, which hasn’t happened since 2012.

Higher Interest Rates Hit Home Prices Again

US Interest Rates

Nonetheless, several economists predicted that the losses would be worse. However, the number of available properties on the market remains limited, preventing property prices from falling much. Bidding wars are still widespread in some regions of the country owing to a lack of available properties for sale. Home prices have declined the greatest in the western part of the country, while prices in several eastern markets have continued to grow from a year ago.

US Interest Rates; Mortgage rates have risen and fallen in recent months after reaching 20-year highs above 7% in October and November. According to Freddie Mac, the average rate for a 30-year fixed mortgage was 6.67% in the week ending June 22.

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“Stable mortgage rates are leading to stable home sales,” said Lawrence Yun, chief economist of the National Association of Realtors. “Despite the sales slump, this is still a fast-moving market.”

Economists polled by The Wall Street Journal before of the report predicted that sales of previously owned houses declined 0.7% in May compared to the previous month.

The slowing housing market is one of the most significant ways that the Federal Reserve’s attempts to combat inflation by raising interest rates have impacted consumers. The Fed held interest rates steady this month, but Chair Jerome Powell stated on Wednesday that further hikes are inevitable in the coming months.

Because many families choose to relocate during the summer before the start of the new school year, the spring is often the busiest season for house sales. US Interest Rates, According to NAR US Interest Rates, existing-home sales increased the most month over month in the West, up 2.6%, and the least in the South, up 1.5%. Midwest and Northeast sales decreased.

Nicole and Alexander Dreher began shopping for their first house in Denver in early 2022, but they were outbid on seven occasions by bidders who could pay cash or considerably over the asking price. “It was just super competitive,” remarked Alexander Dreher. “This year was a much easier process.”

In May, the Drehers made an offer that was accepted for less than the asking amount on a four-bedroom property that had been on the market since February.

Higher Interest Rates Hit Home Prices Again

“There was not any competition, which gave us a lot of leverage,” said Dreher. US Interest Rates; According to real-estate firm Redfin, median home-sale prices in Austin, Texas, decreased 15.1% from a year ago, followed by Boise, Idaho, down 14.3%, and Oakland, California, down 11.2%. Hartford, Conn., had the highest year-over-year price rise in May, up 10%, Rochester, N.Y., up 9.7%, and Cincinnati, up 9.3%.

According to NAR, the average property sold in May was on the market for 18 days, up from 16 days the previous year. US Interest Rates, According to the National Association of Realtors, there were 1.08 million houses for sale or under contract at the end of May, up 3.8% from April but down 6.1% from May 2022. At the end of May, there was a 3.0-month supply of houses on the market at the current sales pace.

According to Realtor.com, the number of new listings plummeted 23% year on year in May.

Daniel Hartnett and Amanda Borsky relocated from Virginia to Massachusetts last year to be closer to family, and they began looking for a home earlier this year. US Interest Rates “There’s just nothing on the market,” Hartnett said. “It was stressful, depressing.”

They eventually had an offer accepted on a four-bedroom property in Westford, Massachusetts, for 10% more than the asking price. The transaction was completed in May.

“We’re very happy with it,” added Hartnett. However, “it was not the best time to buy, that’s for sure.”

In May, the market’s percentage of buyers who were first-time buyers was 28%, up from 27% the previous year. US Interest Rates According to NAR, around 25% of May existing-home purchases were paid in cash, which is unchanged from the same month a year earlier.

The scarcity of existing homes on the market benefits home builders. The National Association of Home Builders reported this week that a measure of home-builder confidence in the United States increased for the sixth consecutive month in June.

US Interest Rates The Commerce Department reported this week that housing starts, a gauge of home construction in the United States, increased 22% in May compared to April. Residential permits, which may be a leading indicator of future home building, increased 5.2%.

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