Mortgage Rate Surge: US Pending Home Sales Drop by 13% in Annual Decline



The surge in mortgage rates has led to a 13% annual drop in pending home sales. Find out how high housing costs and low inventory are affecting potential homebuyers. Stay updated with the latest real estate trends.

According to national property broker Redfin, mortgage rates in the United States are currently near a two-decade high. In addition, U.S. home prices have increased by 3% year over year, resulting in monthly housing payments reaching an all-time high. As a result, potential homebuyers are adopting a wait-and-see approach, hoping that housing prices will become more affordable and more homes will enter the market. Due to the escalating costs, pending home sales have declined by 13% compared to the same period last year. Additionally, the total number of homes available for sale has decreased by 16%, as many homeowners are choosing to stay put and take advantage of relatively low mortgage rates.


Mortgage Rate Surge: US Pending Home Sales Drop by 13% in Annual Decline

On the other hand, a small increase in the number of home sellers has been observed recently. New listings have stabilized and have even seen a slight uptick since the beginning of September. Although they are still 7% lower than the previous year, this marks the smallest decline since July 2022. It's important to note that during this time last year, new listings were dropping rapidly. Some homeowners may be capitalizing on rising home prices and the limited inventory, expecting to be one of the few homes for sale in their neighborhood.

Addressing the situation, the Federal Reserve recently held a meeting where they decided against an interest rate hike. However, they also indicated that interest rates are likely to remain higher than initially predicted until 2024 and 2025. This could lead to borrowing costs, including mortgage rates, remaining elevated for an extended period. Potential buyers who are waiting for housing costs to decrease may reconsider their approach and consider entering the market if they have the financial means to do so. A significant decline in housing prices is unlikely in the near future.

In conclusion, U.S. mortgage rates are currently at a two-decade high, and the increase in home prices has led to a record high in monthly housing payments. This has resulted in a decline in pending home sales and a decrease in the number of homes available for sale. While some homeowners are taking advantage of the rising prices, potential buyers are adopting a more cautious approach, waiting for housing costs to become more affordable. The Federal Reserve's decision to hold off on an interest rate hike indicates that borrowing costs, including mortgage rates, may remain elevated for a longer period. As a result, buyers who are able to afford it may choose to enter the market sooner rather than later.

Mortgage Rate Surge: US Pending Home Sales Drop by 13% in Annual Decline

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