The House Sold
Sales of previously owned homes have dropped by 5.9% in July, and this makes for the sixth straight month of decline in sales. This is the longest streak in 8 years, and economists are calling it a “housing recession”. Mortgage rates sit at 5.13 percent, a decline from previous weeks, but it was less than 3 percent just one year ago, making this the period with the highest mortgage rates since 2011. Due to this, homes are becoming more unaffordable for Americans, despite the median sales price falling from $413,800 to $403,800–the first decrease since January.
Most of this can be attributed to the Fed’s aggressive interest rate policy, which has sent mortgage rates skyrocketing. Increased mortgage rates are keeping buyers away from the market as applications have fallen by 2.3 percent and housing starts fell by almost 10 percent in July. According to real estate business Redfin, some consumers are staying away from home-buying due to fears of a recession, which would likely bring the value of the house down along with it. With this comes more available homes though, with that number increasing by 4.8 percent to 1.31 million houses, which gives hope to people as once things settle, the barrier to enter as a first-time home buyer might be brought down a bit. That has been one of the main problems with the pandemic housing market, and a healthy pullback could fix it like what we are seeing now.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.