NewsPour 10.2.23

Weekly Real Estate News Headlines

• Home Buying Crashing
• Mortgage Rates Hit 23-year High
• Residential Real Estate Hits Record High with Homes Now Unaffordable to Most Buyers

Home Buying Crashing 

Home buying activity is crashing as mortgage rates rise. Pending home sales for August plunged 7.1% from the month before, according to the National Association of Realtors. On a yearly basis, pending transactions were down by 18.7%. Every region recorded a drop. Signings in the Northeast declined 0.9% from the last month and were down 18.2% from August 2022 levels. Pending sales dropped 7.0% in the Midwest and fell 19.1% from a year ago. The South posted a monthly decline of 9.1% in pending sales in August and 17.6% from the previous year. Activity in the West fell 7.7% and was down 21.4% from August 2022. Watch a discussion on our YouTube video here.

Mortgage Rates Hit 23-year High

Home mortgage rates have reached the highest level since 2000, as the average borrowing rate for 30-year home loans topped 7.31 percent this week, according to Freddie Mac. The Fed has signaled that it will keep the interest rate high into next year in an effort to slow inflation. The Fed’s preferred inflation measure, the core Personal Consumption Expenditures index, is currently 4.2%, which is more than double the Fed’s target of 2%. Revised economic projections show that another rate hike this year is possible. In related news the rise in yields and speed of the current selloff in U.S. government debt is raising the possibility of renewed trouble for banks. Watch a discussion on our YouTube video here.

Residential Real Estate Hits Record High with Homes Now Unaffordable to Most Buyers

The value of residential real estate hit a record $52 trillion. The total value of the U.S. housing market is now 49% higher than before the pandemic. The U.S. housing market has increased by more than $2.6 trillion over the past year. Researchers examined the median home prices last year for roughly 575 U.S. counties. They found that home prices in 99% of those areas are beyond the reach of the average income earner, who makes $71,214 a year. Real estate research firm, ATTOM, defined “unaffordable” as someone who must devote more than 28% of their income toward paying for a particular home. Factoring in a mortgage payment, homeowners insurance and property taxes, the typical home priced today would require 35% of someone’s annual wages. Watch a discussion on our YouTube video here.