Soaring mortgage charges and still-elevated dwelling costs proceed to place a damper on the housing market.
Existing-home gross sales slumped 5.9% in October from September, the ninth straight month-to-month decline, and have been down a whopping 28.4% from a 12 months earlier, in accordance with the National Association of Realtors (NAR).
“More potential homebuyers were squeezed out from qualifying for a mortgage in October as mortgage rates climbed higher” from last year, said NAR Chief Economist Lawrence Yun.
The 30-year fixed-rate mortgage averaged 6.61% in the week ended Nov. 17, up from 3.1% a year ago.
The squeeze-out is especially intense for people who want high-end homes. “The affect is larger in costly areas of the nation and in markets that witnessed vital dwelling value features lately,” Yun said.
Home Prices Are Falling
Meanwhile, home prices continue to slide, with the median price for existing-home sales totaling $379,100 in October, down 1.5% from $384,800 in September and 8.4% from a record high of $413,800 in June.
Still, the October price was up 6.6% from $355,700 a year earlier. The largest year-over-year price gains came in Milwaukee (34.5%), Miami (25.1%) and Kansas City, Mo. (21.4%).
Phoenix reported the highest increase in the share of homes that saw price reductions compared to last year (35.9 percentage points), followed by Austin (31.2 percentage points) and Las Vegas (24.4 percentage points).
Getting back to mortgage rates, the 6.6% average for the week ended Nov. 17 did represent a sharp drop from 7.08% a week earlier.
“Mortgage charges have come down since peaking [earlier this fall], so dwelling gross sales could also be near reaching the underside within the present housing cycle,” Yun said.
House Are Becoming More Affordable
Affordability remains an issue. “The median revenue wanted to purchase a typical dwelling has risen to $88,300, nearly $40,000 greater than it was previous to the beginning of the pandemic, again in 2019,” Yun said.
If you’ve bought a home recently, you know what it’s like to meet your mortgage obligations. The monthly mortgage payment on a typical existing single-family home with a 20% down payment was $1,840 in the third quarter, NAR reported.
That represents a trivial rise from $1,837 in the second quarter. But the figure soared 50%, or $614, from $1,223 a year ago.
The burden is particularly severe for first-time buyers. For a typical starter home valued at $338,700 with a 10% down-payment loan, the monthly mortgage payment registered $1,808 in the third quarter.
That barely modified from $1,807 within the second quarter, nevertheless it constitutes a rise of 49%, or $598 from $1,210 a 12 months in the past.
First-time consumers usually spent 37.8% of their household revenue on mortgage funds, up from 36.8% within the second quarter. A mortgage is taken into account unaffordable if the month-to-month fee (principal and curiosity) quantities to greater than 25% of the household’s revenue.
Source: www.thestreet.com”