If you’re a real estate professional in the south, it’s time to break out your CRM and start contacting everyone in your database. According to the National Association of Realtors Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, the South PHSI retracted 8.1% to 97.0, a drop of 30% from September 2001.
An index of 100 is equal to the level of contract activity in 2001. The PHSI dropped 10.2% to 79.5 in September. Year over year, pending transactions across the country slid by 31%. All four major regions recording month-over-month and year-over-year declines in transactions, with the South taking the biggest hit.
In a statement, Yun noted that new home listings are down compared to one year ago since many homeowners are unwilling to give up the rock-bottom, 3% mortgage rates that they locked in prior to this year.
“The new normal for mortgage rates could be around 7% for a while,” Yun added. “On a $300,000 loan, that translates to a typical monthly mortgage payment of nearly $2,000, compared to $1,265 just one year ago – a difference of more than $700 per month. Only when inflation is tamed will mortgage rates retreat and boost home purchasing power for buyers.”
That’s not happening just yet.
According to an article on HousingWire.com, the latest weekly survey data from Freddie Mac shows the 30-year fixed-rate mortgage rose 14 basis points from last week to 7.08%, accelerating its upward trajectory. A year ago at this time, rates averaged 3.14%.
“The 30-year fixed-rate mortgage broke 7% for the first time since April 2002, leading to greater stagnation in the housing market,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
“Generally, during inflationary periods, people hold less money and, thus, spend less. However, that’s not currently the case,” said Nadia Evangelou, NAR senior economist & director of forecasting. “Amid elevated inflation and higher interest rates, the U.S. economy grew more than expected, easing inflation fears for the time being. As a result, mortgage rates surpassed the 7% threshold this week.”