Mortgage rates are up, sales of homes are down
Leaves are beginning to fall, but mortgage rates, consumer prices, and home inventories are rising. While the overall economy remains robust, the current inflation rate is squeezing consumers’ budgets, and many are postponing or even giving up on buying a home. The Federal Reserve has hiked up interest rates three times this year, so in addition to the immediate effect on home sales, the ripple effect on everything from credit cards to auto loans can only further depress home sales for the immediate future.
The Fed’s increases are going to make things a bit bumpy for potential homebuyers. As Fed chairman Jerome Powell recently cautioned on a National Public Radio interview, “We have got to get inflation behind us. I wish there were a painless way to do that. There isn’t. We have to get supply and demand back into alignment. And the way we do that is by slowing the economy.”
The latest market numbers for the greater Charlotte area show a market in transition as a direct result of the Fed’s actions. As of September 30, the number of homes for sale rose by 1,741 compared to last September, an increase of 32.5%, bringing the total of homes currently on the market to 7,104. The slowdown in home sales is reflected in the number of days on market until sale, which increased by 6 days to 22 days, a 37.5% increase from September, 2021,. The median sales price, while not exhibiting the runaway growth of the past few years, still inched up by $45,000 to $380,000, a 13.4% increase from this time last year.
The National Association of Realtors reports that mortgage payments are more than 55% higher than last year. It’s important to remember that while inventory is growing, it’s still lower than normal, so high prices will likely remain the norm. Factor in the decrease in the number of new projects by home builders and it’s easy to see that the housing shortage isn’t going to improve any time soon. As the economy slows, buying a home will be increasingly difficult. Those who do buy must be willing to do their research and keep their options open.