The highest mortgage rates in two decades have started to take a toll, and by the end of 2024, total existing-home sales will probably be the weakest since 2011.
NEW YORK – By the end of 2023, previously owned home sales are expected to decline to a rate not seen since at least 2011, according to many economist forecasts, dragged down by the highest mortgage rates in more than two decades.
Chen Zhao, economics research lead at real estate brokerage Redfin, estimates that total existing-home sales for 2023 will amount to around 4.1 million, which if true, would mark the lowest number of sales since about 2008. And Zhao says sales are unlikely to pick up much next year, with mortgage rates likely to remain at elevated levels.
The quick rise in mortgage rates has driven away all but the most committed homebuyers, with the average rate on a 30-year fixed mortgage up to 7.57%, according to Freddie Mac – about a half-percentage point increase just since August.
According to the Mortgage Bankers Association (MBA), purchase mortgages dropped in late September to the lowest levels since 1995, an indication that home sales will stay depressed in the coming months.
Well-maintained houses in good neighborhoods still often sell for more than the asking price, real estate agents say. However, almost 18% of homes listed in September had price reductions, the highest level since November 2022, according to Realtor.com.
“The market has definitely started slowing,” says Steven Fischer, a real estate agent in Savannah, Ga. “Everyone’s doing open houses, everyone’s doing price reductions, and now sellers are offering a lot of incentives to get buyers to buy their house.”
Source: Wall Street Journal (10/16/23) Friedman, Nicole
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