Experts’ pessimism about the US real estate market is growing.
The US real estate market is in limbo.
He increase in mortgage rates makes many potential buyers take a wait-and-see attitude. Sellers are in no hurry to sell their properties, as the market, which heated up during the pandemic, is cooling down.
All this leads to growing pessimism about the prospects for the housing market. While buyers and sellers aren’t facing a downturn as severe as the foreclosure crisis in 2008, housing market sentiment is getting increasingly grim nonetheless.
In August 2022, the Home Buying Sentiment Index fell 0.8 points to 62, the lowest indicator in a decade, according to the Fannie Mae Mortgage Agency Survey (a survey that evaluates opinions about the US housing finance system).
The Fannie Mae survey shows that consumers expect home prices to fall over the next year.
According to Freddie Mac Mortgage Agency, the fixed mortgage rate for a period of 30 years in mid-September 2022 was 5.66%. For comparison, in December 2020, the rate was 2.68% during the pandemic.
«More aggressive monetary policy has resulted in mortgage rates nearly doubling year-over-year,” said Sam Hayter, chief economist at Freddie Mac. “The rate hike comes at a particularly vulnerable time for the housing market as sellers renegotiate their prices due to lower consumer demand, which is likely to slow price growth further.”
The decrease in demand against the backdrop of high rates also resulted in the largest decline in the number of offers on the market in more than two years. According to brokerage Redfin, new properties for sale fell 12% year-on-year in August.
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