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Home sales in the U.S. are slowing after a frenzied two years that saw median sale prices rise from $329,000 in 2020’s first quarter to $391,200 in this year’s first three months, according to the National Association of Realtors (NAR).
Existing homes sold at an annual rate of 5.6 million in April, compared to 6.1 million through 2021.
Some of the slowdown can be attributed to rising mortgage interest rates. A 30-year, fixed rate mortgage cost 2.68 percent in December 2020, according to the Federal Home Loan Mortgage Corporation. On 23 May, the average rate was 5.47 percent.
However, most homes of reasonable quality that were going to be sold have been, Wall Street Journal analyst Justin Lahart noted in a 21 May essay.
The number of homes on the market has lingered at or near record lows for months, a key factor in driving prices higher.
People who wanted to sell already have taken advantage of rising prices and eager buyers. People who might sell now are reluctant because they would have to pay a premium price for new digs.
“In the end, however, the influence of rising rates will probably prevail—if it hasn’t already,” Lahart wrote.
The slowing April sales figure “reflects deals signed in March or February, with buyers locking in rates that are much lower than what prevails now,” he said.
Buyer traffic—the number of people visiting real estate agencies or houses for sale—fell precipitously in May, the NAR reported, bringing the figure below levels at the beginning of 2020.
“Higher mortgage rates, rising prices, and strong housing demand can’t coexist for very long,” Lahart wrote. “Here’s guessing they won’t.”
TREND FORECAST: Today, for example, with mortgage rates double what they were year-to-date, the U.S. Census Bureau reported that newly built home sales slumped over 16 percent in April from March… and are down nearly 27 percent from last April. However, at this time, minus a wild card event, while we do forecast a drop in housing prices, we do not forecast a housing crash comparable to the Panic of ’08.