While sales of new homes are in free fall in the United Stateslast month, just 4.09 million houses and apartments changed hands on an annualized basis, their lowest level since May 2020.
This is 7.7% less than in September, and 35.4% less than a year ago at the same time, announced Wednesday the National Federation of American Realtors (NAR). It’s also less than the 4.17 million that analysts had expected, according to MarketWatch’s consensus.
« The residential real estate market was frozen in November”, and the level of sales is now close to that observed in the spring of 2020, during the first confinements linked to Covid-19underlined the chief economist of the NAR, Lawrence Yun, quoted in the press release.
« The main factor has been the rapid rise in interest rates, which makes home ownership less affordable and has little incentive for homeowners to put their homes up for sale“, he detailed.
Consequently, the number of homes available for sale remains close to historic lows, details the Federation.
The median price fell, and fell to its lowest since February, at 370,700 dollars. It is, however, 3.5% higher than the median price of November 2021.
Gloomy outlook for 2023
Interest rates on home loans, which were historically low since the start of the Covid-19 pandemic, have increased very rapidly since the beginning of 2022, due to the tightening of monetary policy by the American central bank (Fed) intended to fight once morest high inflation.
Thus, the 30-year rates exceeded 7% at the end of October. However, they have been falling for more than a month, and averaged 6.31% in mid-December, according to data from the real estate refinancing group Freddie Mac, which refers.
And the outlook for the real estate market is not good, because despite the recent decline in real estate rates, they “remain high”observes Daniel Vielhaber, economist for the Nationwide insurance company.
Owners especially want to keep… their rates!
He points out that ” many homeowners have rates around 3% due to refinancing in the past two years and have no interest in putting their home up for sale and doubling their borrowing costs when they move« .
Consequently, the number of properties on the market should remain particularly low, and Daniel Vielhaber expects ” that this will freeze home purchases for most or all of 2023 – until interest rates drop significantly« .
Especially since a recession in 2023 threatens the world’s largest economy – and most advanced economies on the planet.
Inflation peaked in June at 9.1% over one year, its highest level in more than 40 years, according to the CPI index, which refers. It has since slowed, and was 7.1% in November.
