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Homebuyers are facing record-high prices at the same time rates charged for mortgages are beginning to rise. Nicole Friedman reports for The Wall Street Journal:
U.S. home prices soared to a new record in March while mortgage rates continued to rise rapidly, slowing home sales in what has been the hottest housing market in more than 15 years.
Existing-home sales fell 2.7% last month from February, the National Association of Realtors said Wednesday. March sales fell 4.5% from a year earlier.
The rise of remote work and the pursuit of more space unleashed a powerful wave of home buying when Covid-19-related lockdowns started to ease in the middle of 2020. The frenzied housing market, supported by ultralow interest rates at the time, lifted home prices throughout the country. Homes for sale often stayed on the market for less than a month, and sometimes only days, while open houses could draw lines around the block.
Now, that frenzy is starting to ease and the volume of home sales is reverting to pre-pandemic levels, said Lawrence Yun, chief economist for the National Association of Realtors. With mortgage rates at 5% and back to their highest level since 2011, Mr. Yun said he expects home sales in 2022 to decline 10% from last year.
The combination of higher borrowing rates and an extremely low inventory of homes for sale has led some buyers to give up. Purchase mortgage application volume was down 3% last week from a week earlier and down 14% from a year ago, according to the Mortgage Bankers Association’s seasonally adjusted index.
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