The housing market slumped further in October as U.S. home sales fell again, hitting the lowest level in more than 16 years.
Mortgage rates have soared past 7 percent while home prices stay stubbornly high, keeping buyers on the sidelines and discouraging would-be sellers from listing their homes and moving.
Existing-home sales fell to a seasonally adjusted annual rate of 3.75 million last month, according to a report from the National Association of Realtors. That’s a 5.5 percent decrease from September and the lowest level since August 2010, when the economy was recovering from the Great Recession.
“Home buying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023,” NAR Chief Economist Lawrence Yun said in a statement.
At the same time, home prices are still increasing for existing homes, rising 0.4 percent from a year ago, according to NAR. Home prices are significantly elevated from their pre-pandemic levels, further discouraging buyers from jumping into the market.
With rising rates and costs, buying a median-priced home now means shelling out far more — an estimated $2,468 per month, or an 85 percent increase over what typical homeowners pay, according to a new report from Realtor.com.
The typical current homeowner with a mortgage spends $1,332 in monthly principal and interest and holds a 4 percent rate. Realtor.com’s calculations assume new buyers pay a 14.3 percent down payment and hold a mortgage rate of 7.32 percent.
For years, Americans have been reluctant to sell their homes and buy new ones, even if they are looking to expand, downsize or relocate, because they have locked in relatively low mortgage rates. Rates have been on the rise this year, as the Federal Reserve has started increasing borrowing costs, and Treasury yields surge under geopolitical uncertainty.
That has kept inventory low and some would-be buyers on the sidelines. Though that dynamic has started to ease slightly, and inventory has picked up a bit, Realtor.com’s report shows that moving still often means taking on a significantly larger monthly payment.
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