Home sales declined in September as high mortgage rates are keeping buyers out of the market.
Housing economists are urging the Federal Reserve to hold back on raising rates, worried that elevated borrowing costs—that have gone up since the central bank began its hiking cycle in March 2022—have pushed mortgage rates too high and made homes unaffordable for many Americans.
Sales of homes dropped 2 percent in September to a little under 4 million, the lowest such level for more than a decade. The decline, which was a 15 percent plunge compared to a year ago, according to the National Association of Realtors (NAR), was the latest evidence that expensive mortgages are dissuading potential buyers from purchasing homes.
It's not just that homes are unaffordable... for current homeowners, what's our incentive to sell?
We bought our home in October of 2021 and have a 3.25% 30 year fixed interest rate. Why on earth would I voluntarily give that up for a (checks rates) 8.333% (!?)
Yeah and I bet there’s a lot of people in your shoes. There’s gonna be a whole bunch of houses that were purchased or refinanced in 2021 that are not gonna move for years.
My son being one of them. Their family has grown significantly, but there’s no way they could buy a bigger house right now. Oh they could sell their house for a lot more that they bought it for but not be able to buy a new one for anywhere close to the interest rate they currently have. It would be a lateral move it best, and what’s the point.
We own ours outright and would love a slightly bigger house. But there’s no way we’re doing >8% interest. Not at the inflated price of houses these days.
Housing wasn’t exactly affordable before the rate hikes
I wonder if the only way out is through inflation. Devalue the dollar until a $500,000 house at 7.5% interest is affordable to the average person. It would be painful, but it would keep people from going underwater on their loans.
This is probably a dumb idea but I’m looking forward to learning why it’s dumb.
You're talking about hyper inflation basically? Did you enjoy the grocery prices just skyrocketing during covid without your salary keeping up? Imagine that on everything.