Austin Business Journal writes, "The Federal Reserve may have cut interest rates last month, but homebuyers still face a challenge when assessing the current market for real estate: home prices.
Prices were up 5.9% in the third quarter this year over the same three-month period in 2023, according to data from Fannie Mae. While that increase is down from a 6.4% spike in the second quarter, it’s still a substantial jump for buyers who are looking for a home.
Mark Palim, Fannie Mae senior vice president and chief economist, said the “robust” growth is because of a lack of supply. Many current owners don’t want to sell their homes and give up the low interest rate they obtained earlier only to step into a high-interest rate environment.
“Even though mortgage rates fell precipitously in the third quarter, and we saw some improvements to the months’ supply of homes for sale, home purchase activity barely budged — at least on a national basis — which we view as evidence that the market remains significantly constrained by both the ‘lock-in effect’ and affordability generally, but especially elevated home prices,” Palim said in a statement.
A September survey of consumers by Fannie Mae that found 42% of respondents said they expect mortgage rates to decline over the next 12 months but that consumers also expect prices to rise. Consumers also changed what they said was their biggest barrier to housing affordability, with prices taking the top spot from interest rates, Fannie Mae said.
Palim pointed out that existing home sales currently are on pace to record their lowest annual total since 1995.
"This signals to us that consumers are paying attention to the easing interest-rate environment but still feel stymied by the considerable run-up in home prices over the last four years," Palim said. “The timing of the long-expected pick-up in home sales-activity, as well as a further moderation in home-price appreciation, will depend in part on the willingness of current homeowners to relinquish their low mortgage rates by offering their homes for sale."
Real estate firm Redfin found that when mortgage rates temporarily dropped to their lowest level in more than two years, at 6.08%, buyers entered the market, and that caused pending home sales in September to jump 3.1% over September 2023, the biggest annual increase since May 2021.
Mortgage rates subsequently have since climbed back up, to about 6.44%.
Elijah de la Campa, Redfin senior economist, said the increase in activity showed that there are buyers and sellers willing to enter the market if the conditions are right.
"My advice for buyers is, 'Don’t try to time the market.' There are a lot of swing factors, like the upcoming jobs report and the presidential election, that could cause the housing market to take unexpected twists and turns. If you find a house you love and can afford to buy it, now’s not a bad time," de la Campa said.
Redfin reported that the median sale price on homes in September was $428,212, up 3.9% over the same month last year but down 1.1% from August prices.
According to the Federal Reserve, the median sale price of a house sold in the United States during the second quarter was $412,300. That was down from $418,500 in the second quarter of 2023 and down from a peak of $442,600 in the fourth quarter of 2022.
Meanwhile, an analysis of average monthly mortgage payments by brokerage Zoocasa from 2018 to 2023 across 50 cities found that the average monthly payment grew faster than median income in all of those measured markets.
All told, many Americans are pessimistic about their ability to purchase a home, according to a survey by new-construction marketplace NewHomesMate. Fifty-seven percent of respondents said they doubted they could ever afford their “dream” home. Additionally, 58% of respondents said they would be open to downsizing to afford a home, while 31% would be willing to extend their commute to work to make their budgets go further."
Source: Austin Business Journal
Written by: Andy Medici
Published: October 22, 2024
Posted by Grossman & Jones Group on
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