Sales were down 15.3% from August of last year. This is based upon closings of contracts that were likely signed between June and July when the 30-year fixed rate mortgage average was around 6%. The rate jumped to over 7% at the end of the month and stayed there. This hit affordability hard. The short-term impact of mortgage rate changes is significant, but the long-term impact will be positive. It is not just the higher rates that are affecting potential buyers. Also, they are not finding many options on the market. Just 1.1 million units were available for purchase at the end August. This was a drop of 0.9% in the month, and a fall of 14% over the past year. Inventory has reached a 3.3 month supply. The lack of inventory has pushed prices up again. The median price of a home sold in August was $407,100, up 3.9% from a year ago and the highest reported price for the month of August.
Yun said supply needs to double to moderate these price gains.
“Homeowners are in fine shape. Yun said that renters were frustrated, while Realtors and mortgage broker’s challenges are the biggest. While sales were down across all price points, they were nearly flat for homes priced above $1 million, and in that range they were actually higher in both the South and the Midwest.
“Already, rising homebuying costs and falling rents have tipped the monthly rent vs. buy tradeoff in favor of renting in the overwhelming majority of the 50 largest metropolitan areas,” said Danielle Hale, chief economist at Realtor.com, in a release. This is true in both tech hubs such as Austin and San Francisco as well affordable markets like Columbus.