Despite high-interest rates on mortgages, new housing was in demand in October – according to the Census Bureau, sales of 1-family homes increased by 7.5%, or to 632,000 year-on-year and taking into account seasonal factors.
However, this figure was 5.8% lower than in October 2021.
The high cost of real estate certainly played a role – the median price of such an object was 493 thousand dollars, and the average cost of a house sold reached 544 thousand.
Poor housing affordability may also be linked to the fact that the demand for pre-built housing has been consistently declining for 9 consecutive months, and the October figure decreased by 5.9% compared to September and by more than 28% – in a year, according to the National Association of Realtors.
The development of the real estate industry has been slowing down for several months due to the actions of the Federal Reserve, which have led to an increase in interest rates on mortgages, the repayment of which is an increasing problem for many potential buyers. And although, as Sam Hater, chief economist at Freddie Mac, noted that the fixed rate on loans for 30 years fell to 6.61% in November, and then to 5.58%, these changes have not yet contributed to the activation of demand, and the situation as a whole remained uncertain.
“Such instability affects the behavior of those who want to become homeowners no less negatively than significant interest rates,” the expert added. “And it is no coincidence that sales of pre-built homes are declining in all price categories.”
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