The American housing market is experiencing a slump not seen in decades, as existing home sales are projected to reach their lowest point since 1995 for the second year running. Persistent high prices and soaring mortgage rates are deterring buyers, signaling deeper issues within the economy.
Key Facts:
– Existing home sales in September fell 1% from the previous month to an annual rate of 3.84 million, the lowest since October 2010.
– Sales are down 3.5% compared to the same month last year, according to the National Association of Realtors (NAR).
– Mortgage rates have risen for three consecutive weeks, reaching the highest levels since August.
– The national median existing-home price in September was $404,500, a 3% increase from a year earlier.
– NAR’s chief economist Lawrence Yun predicts that home sales may remain at low levels into 2024.
The Rest of The Story:
Persistent high home prices and elevated mortgage rates are deterring potential homebuyers, leading to a significant slowdown in the housing market.
The National Association of Realtors reported that existing home sales in September dropped by 1% from the previous month and 3.5% from the same period last year, according to a report in the Wall Street Journal.
Economists had hoped for a market rebound in 2024, but the continuous rise in mortgage rates has dampened those expectations.
Rates have remained higher than many forecasted, partly due to the Federal Reserve’s recent interest rate decisions.
The uncertainty surrounding inflation, labor data, and the upcoming presidential election is also contributing to market hesitancy.
High mortgage rates, coupled with increasing home prices, have made affordability a significant issue.
The median existing-home price rose to $404,500 in September, marking a 3% increase from the previous year.
While some potential buyers anticipate a future drop in mortgage rates, ongoing price hikes may offset any potential benefits.
Pretty concerning how low homebuyer demand is right now.
Mortgage apps to buy a house are down 45% from pre-pandemic levels.
Languishing at lowest level in 30 years.
And now mortgage rates are spiking again. pic.twitter.com/yaoIYDFn6m
— Nick Gerli (@nickgerli1) November 6, 2024
Commentary:
The current state of the housing market reflects the consequences of the Biden administration’s economic policies.
“Bidenomics” has caused rising inflation, which in turn has led to higher interest rates as the Federal Reserve attempts to combat escalating prices.
These increased rates have made mortgages more expensive, putting homeownership out of reach for many Americans.
Moreover, a weaker job market under the current administration has left potential buyers with less financial security.
With wages not keeping pace with inflation and job growth stalling, consumers are less confident in making significant investments like purchasing a home.
The combination of these factors suggests that without a shift in economic policy, the housing market will continue to struggle.
The incoming Trump administration needs to quickly address these issues to get the housing market back on track.
The Bottom Line:
The U.S. housing market is in a serious decline, with existing home sales reaching lows not seen in almost three decades.
High home prices, elevated mortgage rates, and economic uncertainty are keeping buyers on the sidelines.
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Unless there are significant changes in economic policies to address inflation and interest rates, the market may continue to face challenges, impacting not just potential homeowners but the broader economy.