The housing market took another step back last month as sales of existing homes fell under the weight of rising mortgage rates and expensive list prices in a continued pattern of decline in the nation’s housing market., the National Association of Realtors said on Wednesday. Sales were down 3.5% compared to a year ago to a seasonally adjusted rate of 3.84 million, the slowest pace in nearly 14 years.
Along with continually increasing asking prices, mortgage rates have also put a serious damper on buyers’ budgets. A few percentage points are worth hundreds of dollars on a monthly mortgage payment, which can cause large swings in affordability. The ultra-low interest rates available during the pandemic were the primary reason the housing market boomed so strongly as it expanded affordability to significantly more people.
“In general, higher rates reflect the strength in the economy that is supportive of the housing market. But notably, as compared to a year ago, rates are more than one percentage point lower and potential homebuyers can stand to benefit, especially by shopping around for the best quote as rates can vary widely between mortgage lenders,” Freddie Mac chief economist Sam Khater said in a release.
With less existing homes being for sale, there is more competition for a limited supply, which helps keep prices higher despite the skid the housing market has been on.
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