So, is it a buyer's market or a seller's market? The answer: No.
Whether you're looking to buy a home or sell one, now is just a crummy time. Sales of existing homes in the US have now fallen for eight months in a row — a painful hangover from the heyday of the pandemic-era buying frenzy.
Here's the deal: Buyers are getting pushed out of the market because of surging mortgage rates and high inflation. And sellers are far less confident now that they can secure the kinds of sale prices they watched their neighbors lock in a year ago, so they're holding off, too. That's making the long-running inventory problem even more stark.
Two key data points released Thursday underscore the grim mood:
- Sales of existing homes fell nearly 24% in September from a year ago, and were down 1.5% from August.
- Mortgage rates aren't letting up. The average 30-year fixed-rate mortgage was just a hair shy of 7% this week. A year ago, it was just over 3%.
Put another way: One year ago, you could drop 20% down on a $390,000 home, and finance the rest with a typical mortgage, for a monthly outlay of about $1,331.
That exact same house, purchased today, would cost you $2,063 a month — $732 more — each month.
Seven hundred and thirty-two bucks!
And of course, on top of all of that, the cost of everyday necessities like food have also shot up more than 8%, making everything else less affordable too.
*cue the clip of Jay Powell demonically uttering "some pain" on a loop...
That's right, we're bringing it all back to the Federal Reserve here. Because what was once seen as an unimaginably aggressive monetary policy has now become the status quo at our nation's central bank.
The Fed doesn't directly control mortgage rates, but its actions affect the yield on the 10-year US bond, which tends to move in lock step with mortgage rates. On Thursday, the 10-year yield rose to 4.23% — its highest level since 2008.
And because the Fed is widely expected to keep up its rate hikes for at least the rest of this year, we don't expect mortgage pressure to ease anytime soon.
I hate to be so depressing, so here's where I'll just remind folks that the job market is still super strong, and gas prices aren't as bad as they were this summer. That's gotta count for something.
Comments
Post a Comment