Pending home sales sink 10% in September as mortgage rates climb
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September Pending Home Sales: -10.2% M/M to 79.5 vs. -3.8% consensus and -1.9% in August (revised from -2.0%). That's the fourth straight month of declines.
Y/Y, pending transactions slumped by 31%.
"Persistent inflation has proven quite harmful to the housing market," said National Association of Realtors Chief Economist Lawrence Yun. "The Federal Reserve has had to drastically raise interest rates to quell inflation, which has resulted in far fewer buyers and even fewer sellers."
All four major regions experienced M/M and Y/Y declines in transactions.
New home listings are down from a year ago, as many homeowners don't want to give up the 3% mortgage rates they locked in before this year, Yun noted.
"The new normal for mortgage rates could be around 7% for a while," Yun said. He pointed out that a typical monthly mortgage payment on a $300K loan is now almost $2K per month compared with $1,265 a year ago.
"Only when inflation is tamed will mortgage rates retreat and boost home purchasing power for buyer," he said.
On Thursday, 30-year mortgage rates crossed the 7% mark for the first time in more than 10 years.
Earlier this month, mortgage giant Freddie Mac projected that housing prices will decline next year as rapidly rising mortgage rates increases the supply of homes available for sale.