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Mortgage rates continue to climb higher, in anticipation of another aggressive move that the Fed will likely take at the upcoming FOMC meeting to combat against high inflation. The 30-year fixed-rate mortgage has climbed more than 3% points since a year ago, and mortgage applications for purchase have declined in eight of the past ten weeks as housing affordability continued to deteriorate. The pullback in housing demand has also resulted in sellers cutting down their asking price as their homes sit on the market longer. Nearly half of all for-sale properties, in fact, have seen a price reduction according to the latest weekly data from MLS’s.
Single-family home sales moderate further: The market continues to show signs of normalization with sales dipping below last year’s level and price growth ebbing into low single digits. Homes are staying on the market longer (24 days) and sellers are reducing prices more frequently. However, with open-escrow sales rising on a month-to-month basis in both August and September so far, a bounce back in closed sales could be observed in the coming months.
Housing inventory rises but not due primarily to a rush in new listings: Inventory has been climbing in recent months and was up significantly from last couple years. Home sellers, however, do not appear to be heading for the exits as most of the uptick in inventory is due to a decline in sales rather than a flood of new listings hitting the market. New listings last week, in fact, were running roughly on par with the past two years. With many homeowners locked into historically low interest rates and the future of the housing market remaining unclear, many sellers opted to stay put rather than rushing to list their property.
More home sellers backing out: More sellers removed their listings from the market, results from the latest C.A.R. monthly member sentiment survey show. The share of REALTORS® who said sellers were removing their properties from the market grew in the last two months from 14.5% to 23.8%. The level was as high as what we observed during the pandemic shutdown and was the first time since May 2020 that the share went above 20%. Meanwhile, the share of members who have seen home sellers reduced their price to attract buyers increased for the fifth consecutive month to 43.4%. The share of buyers expecting lower prices also has more than doubled from 32% in April 2022 to 78% in September 2022.
Mortgage rates reach highest level since late 2008: The average 30-year fixed-rate mortgage (FRM) increased for the third consecutive week and took another step closer to the 6% benchmark. As of September 8, the weekly average for the FRM according to Freddie Mac’s survey, rose from 5.66% to 5.89% - the highest since 2008 and surpassed an earlier high of 5.81% set in June. The recent uptick in mortgage rates came once again in anticipation for more aggressive monetary policy that the Fed will likely implement later this month as the board attempts to keep high inflation under control.
Mortgage applications slip: The market composite index, a measure of mortgage loan application volume, decreased 0.8% on a seasonally adjusted basis for the week ending on September 2, compared to the week prior. Mortgage applications to purchase a home decreased 1% on a week-to-week basis and dropped 23% for the same week a year ago. With the cost of borrowing continued to ascend to its highest level since mid-June, application volume for purchase and refinance loans remained on a declining trend as the market entered the slow season of the year. Recent economic data suggests that any significant decline in mortgage interest rates in the near term is unlikely, which means housing demand will remain subdued for the next several months.
If you're ready to discuss today's market and whether now is a good time for you to buy or sell, give me a call at (562) 900-9430.
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