A “For Sale” sign is posted outside a home in Arlington, Virginia, on August 22, 2023.
Andrew Caballero Reynolds | AFP | Getty Images
According to the National Association of Realtors, condo sales fell 0.7% in August from July to a seasonally adjusted annual rate of 4.04 million units. Sales fell 15.3% compared to August last year.
This figure is based on deals likely signed in June and July, when the average interest rate on the popular 30-year fixed-rate mortgage was in the high 6% range. It rose over 7% towards the end of July and stayed there, severely impacting affordability.
“Home sales have been stable for several months and have neither increased nor decreased in any meaningful way,” Lawrence Yun, NAR chief economist, said in a news release. “Changes in mortgage rates will have a large impact in the short term, while job growth will have a steady, positive impact in the long term.”
However, it’s not just the higher interest rates that affect potential buyers. You won’t find much on the market either. There were just 1.1 million units for sale at the end of August, down 0.9% for the month and down just over 14% year-over-year. Inventory is now 3.3 months. A six-month supply is considered settled between buyer and seller.
Due to the limited supply, prices have risen significantly again. The average price for a home sold in August was $407,100, a 3.9% increase from a year ago and the highest reported price for the month of August.
Yun said supply would have to double to mitigate these price increases.
“The homeowners are doing well. It’s brokers and mortgage brokers who are facing challenges, and tenants are frustrated,” Yun said.
At the bottom of the market, where supply is lowest, sales continue to be weakest. While sales fell across all price ranges, they remained almost unchanged for homes priced above $1 million, and in this range they were even higher in both the South and the Midwest.
“Rising home-buying costs and falling rents have already shifted the trade-off between monthly rent and purchase toward rent in the overwhelming majority of the 50 largest metropolitan areas,” said Danielle Hale, chief economist at Realtor.com, in a news release. “This applies not only to tech hubs like Austin and San Francisco, but also to affordable markets like Columbus, Ohio.”
Source : www.cnbc.com