Soaring mortgage rates in the United States have discouraged home buyers. Although existing home transactions have declined, housing prices have not cooled down significantly.
On the 21st local time, The National Association of Realtors (NAR) released the latest data. The total number of existing home sales in May was recorded at an annualized rate of 5.41 million households, continuing to hit a new low since June 2020 . The previous value was 5.61 million households. , this indicator has fallen for four consecutive months, with existing home sales in May falling by 3.4% month-on-month and 8.6% year-on-year. Lawrence Yun, chief economist of
NAR, said that the U.S. housing market has experienced two years of booming market, and transactions have basically returned to pre-epidemic levels in 2019. The impact of rising mortgage interest rates has not yet been fully reflected in the above data. It is expected that housing prices will increase in the next few months. Sales will continue to decline.
30-year mortgage loan interest rate is approaching 6%
The sharp rise in U.S. interest rates and rising housing prices have greatly reduced housing affordability, and home buyers are taking a wait-and-see attitude.
On March 16 this year, the Federal Reserve launched the first interest rate increase since December 2018. On June 15th, the central bank took another drastic step, raising interest rates by 75 basis points to combat the problem. Inflation is at a 40-year high. In the past three months, the Federal Reserve has raised interest rates by a total of 150 basis points, and the federal funds rate range has been raised from 0%-0.25% to 1.5%-1.75%.
Housing mortgage company Freddie Mac (Freddie Mac) data shows that 30-year mortgage interest rates have soared from 4.16% to 5.78%, the highest level since 2008. Fed Chairman Powell said at the press conference after the June interest rate meeting that both 50 basis points and 75 basis points were under consideration at the July meeting. Recently, 30-year mortgage loan interest rates have been heading towards 6%. Higher interest rates will push up the cost of home purchase and suppress the demand for home purchase.
Real estate agency Redfin released a report on the same day showing that if the mortgage interest rate is 6%, based on a monthly repayment of US$2,500, less than 46% of the houses for sale in the United States will be affordable to the American people; if the mortgage interest rate is 6%, If it is 3%, then nearly 62% of the housing stock in the United States will be affordable. In addition, statistics from the agency show that nearly 60% of the houses sold in May were still sold at a price higher than the listing price.
Supply exceeds demand, and U.S. housing prices hit new highs
Despite the sharp drop in transactions, the U.S. real estate market is still facing a severe shortage of supply. The report shows that as of the end of May, there were 1.16 million existing homes for sale in the United States, an increase of 12.6% from the previous month, but a decrease of 4.1% from the same period last year. According to the current sales rate, the supply of existing homes for sale can only support 2.6 months. It is generally believed that 6 months of inventory supply reflects the balance of market supply and demand. When the property market was at its hottest last year, the inventory was only two months. .
There is a serious shortage of houses for sale and serious supply constraints, which continue to drive up housing prices. data shows that the median house price in the United States exceeded the $400,000 mark in May, rising 14.8% from the same period last year to $407,000, a new high since the late 1980s. This indicator has been for six consecutive years. The year-on-year rise is 3 months, the longest rising trend on record.
Looking at the trading performance of properties at different price points, low-end properties priced between 100,000 and 250,000 US dollars performed the most sluggishly. Sales in May fell 27% from a year ago; sales prices ranged from 750,000 US dollars. Sales of properties priced at over US$1 million increased by 26% year-on-year; sales of high-end properties priced over US$1 million increased by 22% year-on-year.
According to data from the US real estate website Realtor.com, the average time for existing homes on the market to be on the market is only 16 days, which is the fastest pace since the platform began tracking this indicator in 2016. htmlIn May, the amount of all-cash transactions accounted for 25% of total existing home sales, higher than 23% in the same period last year; the proportion of first-time home buyers dropped from 31% in the previous year to 27%. Historically, this indicator has generally been 40% Around this time, May’s data means that many people who are interested in “getting into the car” have been squeezed out of the market because they cannot afford the high housing prices; last month, the transaction amount of real estate speculators accounted for 16% of the total existing home sales. Danielle Hale, chief economist at
Realtor.com, said that higher short-term interest rates are driving a reset in the real estate market, which needs to be rebalanced. As buyers and sellers quickly adjust their expectations in response to market conditions, it is increasingly challenging to grasp the direction of the market. . The agency recently updated its housing market outlook, predicting that home sales this year will be lower than last year.
Consumers have a pessimistic view of the real estate market. According to a survey conducted by Fannie Mae in May, only 17% of consumers think now is a good time to buy a house. This proportion is the highest since mid-2010. At the same time last year, 35% of the respondents held the same view.
