Extra, extra! An unpredictable market scenario: the US housing market has been hit by a surprising dip in new house sales in October 2023, a stark deviation from the projected figures.
This development further exacerbates the housing market's ongoing struggles. And there is more about it in the article below. Read now!
US Housing Market's Recent Numbers
According to The Census Bureau and the Department of Housing and Urban Development (HUD), in the wake of mortgage rates peaking at an 8% high, the sales of single-family homes in the US stagnated at 679,000 on an annual rate after seasonal adjustment, falling short of the forecasted 725,000.
Numbers are from October 2023 – and there is more!
- As per the data, the sales figures were 5.6% lower than September's, even being 17.7% higher than the previous year.
- The sales also fell short of the preceding year's sales, which exceeded a million homes.
- The median price for a new house was reported to be $ 409,300, with an average price of $ 487,000.
Further, HUD data reveal a significant decrease in existing home sales in September, marking the lowest since 2010. Existing home sales fell by 2%, adjusting to a seasonal rate of 3.96 million units from August's 4 million, and the year-on-year sales also saw a decline of 15.4%.
The scarcity of existing homes for sale and escalating mortgage rates have been instrumental in this downturn.
Impact Of Federal Reserve Rate Hikes And The Challenges Of Housing Affordability
The Federal Reserve, in response to soaring prices in the economy, has been heightening the interest rates over the past year, reaching a record high of 8% in October. These rates are primarily influenced by the yield on 10-year US treasuries rather than the prevailing interest rates, which range between 5.25 to 5.5%.
Not to mention that The Case-Schiller national home price index has skyrocketed to an all-time high, indicating a sharp upward trend since the onset of the pandemic, so while the Federal Reserve has temporarily halted further rate hikes due to a slowdown in inflation, the cost of shelter remains exorbitantly high, with prices around 20% higher than pre-pandemic levels.
Affordability indexes for homeownership and rental are presently at their lowest in decades, as per data from NAR and HUD. And the surge in mortgages has made housing affordability a formidable challenge.
Despite uncertainties and speculation over interest rates peaking, the Federal Reserve has predicted one more quarter-point rate hike this year while investors are already banking on cuts. Also, the precarious housing situation has instigated protests in Washington, echoing the growing concerns of tenants and housing activists.
As the housing market continues to grapple with these challenges, it remains to be seen how lawmakers will respond to this crisis.