Year over year housing prices are well over $400,000, an increase of about two percent from last year at this time. At the same time, interest rates for long term mortgages have hit decade highs this week as inflation continues to show staying power despite the Fed’s aggressive hikes.
The interest rates have tightened inventory, as New England’s number of annual home sales were down six percent year over year in the month of July. Listings are down 50% compared with pre-covid highs nationwide.
The higher interest rates are sighted as the reason for limited supply, as would be sellers are concerned about losing locked in lower interest rates. The market is largely limited to families that are looking to downsize or move from a specific area due to job location. As a result, homes worth over $1 million dropped in sales (not in price) the most of any category.
High interest rates continue to favor landlords, as rents continue to rise as people are finding it better to rent than to buy in many price categories and regions.
Thirty year mortgage rates have hit 7.48% for the first time in 20 years, a year over year hike from 5.5%. Even if the Fed lowers rates sometime before the end of 2023, it is unlikely to impact long term interest rates. The result for lenders such as banks is a volatile and limited market.
The refinance market is gone, and even new home buyers that pay in cash have dramatically increased due to the interest rate pressure.