Housing Crisis: Mortgage rates continue to rise despite a decline in home sales, according to new economic data analysis.
Fortune reports that sales of previously occupied homes in the United States declined in August to their slowest annual pace in over a year.
The primary cause? Rising mortgage rates and home prices.
Today, when Americans look at home prices to RedFin or Zillow, one can only think, “how the hell am I going to afford a proper home?”
For Gen Z and younger Millennials, it almost seems like an impossible goal at first glance.
Younger Americans are still building credit history, still building a career, still getting their lives in order and becoming a first-time homebuyer only fuels to daily life stress.
More discouraging is the fact that new buyers have to sacrifice number of bedrooms and their environment, moving further away from the bigger cities.
Often times, this means looking rural areas or undeveloped small cities.
Home sales also fell 1.2% compared with August last year. The latest sales tally is just shy of the 4 million pace economists were expecting, according to FactSet.
Americans have hit a pause button on buying homes, especially as mortgage rates continue to climb and house prices continue to skyrocket.
Mortgage Rates Rise for Third Week in a Row
Mortgage rates have risen for the third week in a row, pushing the average long-term U.S. home loan rate to its highest level in over 14 months.
The benchmark 30-year fixed rate mortgage went up from 6.71 last week to 6.76, mortgage buyer Freddie Mac reported Thursday.
Just a year ago, the average mortgage rate was 6.35%.
Higher mortgage rates means additional costs to borrowers, which drastically limits homebuyers’ purchasing power.
Housing Market News – Mortgage rates rise while home sales fall.
Americans are delaying the purchase of their first home, with the average first-time homebuyer age now being 40 compared to 28 in 1992.
For these reasons, home sales have declined or remained stagnant in certain areas.
15-year mortgages also went up.
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That average rate increased to 6.09% from 6.04% last week. A year ago, it was at 5.5%.
“Years of soaring home prices, especially in the early part of this decade when rock-bottom mortgage rates fueled a buying frenzy, have left many would-be homebuyers frozen out of the market,” said AP.
Pending Home Sales Are Also Getting Cancelled
National Mortgage Professional says 14% of pending home-sale agreements were cancelled in July.
That’s up 0.7 percentage points from a year ago and 0.3 from the month prior in June.
What’s triggering pending home sales to get cancelled?
Additional costs such as inspections, repairs, appraisal worries and doubts, and overall finances all play a part in these rising cancellations.
