As the housing market continues to cool after years of red-hot home sales, recession concerns are causing a growing number of buyers to hold off on home purchases. Even as bidding wars slow to a halt and sellers drop their asking prices, the Fed’s inflation control methods are ongoing, according to CNBC. The average rate on the 30-year fixed mortgage started this year right around 3%, and 9 months later, that rate is just above 6%, meaning that a person buying a home for $400,000 would now have a monthly payment roughly $700 higher than it would have been in January.
In addition, home prices are currently 43% higher than they were at the start of the pandemic, while active inventory is 43% lower than it was in 2019. As an affordability crisis becomes more widespread, buyer demand is dipping, but those who can still afford inflated home prices are finding less competition and more bargaining power.
Homebuilder sentiment in the single-family market fell into negative territory in August for the first time since a brief dip at the start of the pandemic, according to the National Association of Home Builders. Builders reported lower sales and weaker buyer traffic.
“Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession,” said NAHB Chief Economist Robert Dietz in the August report.
Advertisement
Related Stories
Townhomes
Townhome Construction Gains in Popularity as Buyers Seek Medium-Density Housing
Townhouses made up 18% of single-family housing starts during Q1 2024
Housing Markets
5 Housing Markets That Would See a Huge Increase in Homeownership if Mortgage Rates Dropped
Spokane, Wash., would experience an 11.4% increase in affordability if rates dropped to 6%
Housing Markets
Spring Housing Markets: Which Markets Saw the Most Appreciation, and Which Saw the Least?
Florida metros saw the weakest appreciation of all housing markets in the US