Is America’s house sales boom over?
There had been so much going on in the real estate industry less than a year ago. It was driven by the buyers taking advantage of the low mortgage rates. Even with the increasing home prices, people are very much into buying houses because of the cheap money.
Now, both sellers and homebuyers seem to be waking up to the new reality – expensive homes, low inventory, and high borrowing costs.
In the past year, home sellers received multiple offers and saw their homes increase in value by double-digit percentages. Today, predictions are telling that prices will continue to decline until there’s flat, 0% growth in the market this year.
Below are the Mortgage Bankers Association (MBA) reports and predictions on home purchases and refinances.
|Activity||2021||End of 2022||% increase/ (decrease)|
|Purchase||5.2 M||4.5 M||(15%)|
|Refinance||8.3 M||2.1 M||(75%)|
On the other hand, the MBA gives the median price on existing and new homes comparison between the 1st quarters of 2021 and 2022.
|Median Price for||Q1 – 2021||Q2 – 2022||% increase/ (decrease)|
The home-selling frenzy is calmed down by increasing mortgage and low inventory rates. What is expected this coming new year?
The National Mortgage Professional’s survey says that economists expect home prices to rise in 2023. And that the housing market will largely depend on mortgage rates. Inflation hurts buyers with the high mortgage rates which greatly influence the housing market.
The increasing 30-year fixed-mortgage rate leads to an increase of home monthly payments by over 40%. With the possible increase in interest rates, the 30-year fixed-mortgage rate is also expected to increase making it hard for people to continue buying homes.
In 2023, the MBA predicts about a 6.85% increase in existing home prices and only less than 1% for new homes. On the other hand, Moody’s Investor Services foresees a decline of 5% in new home prices.
Source: NMP Magazine