Home sales are a strong Macro indicator. They are a large part of the economy and also affect many related products, such as furniture, appliances, etc.
**U.S. Home Sales Dropped in July for Sixth Straight Month** **Median sale price eased last month to $403,800 from June record of $413,800** **By David Harrison and Nicole Friedman, The Wall Street Journal, Aug. 18, 2022**
**...** **Sales of previously owned homes dipped 5.9% in July from the previous month to a seasonally adjusted annual rate of 4.81 million, the National Association of Realtors said Thursday. That was the weakest pace of sales since November 2015, excluding the three-month pandemic-related drop in the spring of 2020. July sales tumbled 20.2% from a year ago....**
**The combination of high prices and rising interest rates has pushed home-buying affordability to its lowest level in decades. People entering the housing market now typically pay 25% of their income on mortgage payments, up from 15% before the pandemic...Almost 16% of home-purchase agreements that were pending in July fell through...** [end quote]
The slowdown in home sales is exactly what the Federal Reserve was expecting when they started raising the Fed funds rate and selling mortgage bonds from their book. The stunningly rapid rise in home prices has been driven by historically low mortgage rates as well as higher demand than supply.
Home builders are reducing housing starts since they see home sales falling and are also being squeezed by higher interest rates.
The slowdown in home sales is typical of recessions. The Fed is hoping to cool off the hot market without inducing a recession. This is a bad time to sell (since prices are pressured down) and also to buy (due to higher mortgage rates).
Home builders are reducing housing starts since they see home sales falling and are also being squeezed by higher interest rates.
The slowdown in home sales is typical of recessions. The Fed is hoping to cool off the hot market without inducing a recession. This is a bad time to sell (since prices are pressured down) and also to buy (due to higher mortgage rates).
I am not convinced it is a bad time to sell, but I guess we will find out in mid February when we hope to put our house on the market. Mid February is the start of our busy season, due to a couple of large employers putting out offers at that time. Our area is still not seeing much in the way of price declines, though the multiple bids over ask is pretty much a thing of the past.
Having housing starts reduced even further, when there is such a deficit of available housing for those who move here, makes it all the more likely that people will pounce on our home when it hits the market. We have discussed the possibility of seller financing and can be super flexible on when to close. We are not buying another house at this time, and instead are using our vacation home to store the things we cannot replace or have emotional attachment to them. Using the vacation home as a base, we will tour around the USA, taking 30 day plus rentals and checking out areas of interest until we find a place we want to move to. Hopefully by the time we chose to buy another place, the market will have cooled!
I am so ready for this grand adventure. Last kid has flown the coop and there is no real reason for us to stay here. The only thing I will mourn is the loss of our 2% 30 year fixed mortgage. We carry a mortgage as an inflation hedge, and it’s unfortunate to decide to toss it when inflation makes it so profitable to hold, but healthy time is limited and I can’t stand this climate.
I agree it’s a good time to have options in housing. I wouldn’t want to HAVE to move at this time, but as long as you don’t have to be out of the house by a certain date, I am not sure it’s such a big deal.
The only thing I will mourn is the loss of our 2% 30 year fixed mortgage. We carry a mortgage as an inflation hedge, and it’s unfortunate to decide to toss it when inflation makes it so profitable to hold, but healthy time is limited and I can’t stand this climate.
So keep the house, keep the 2% mortgage, move out, and then rent it out.