According to the data, the number of home sales in September was 478,593 units, down 25% year-over-year and the lowest level since records began, excluding the epidemic unrest. In addition, the number of new homes listed was 503,156, down 22 percent from last year.
It is understood that the sharp drop in home prices is mainly due to the continued spike in mortgage rates.
The figure is close to 7% and mortgage rates are expected to rise further as the Federal Reserve implements more interest rate hikes.
Higher mortgage rates have reduced affordability and pushed many buyers out of the market.
The real estate market will get worse before it gets better. With inflation still high, the Fed will likely continue to raise interest rates.
This means that we probably won't see high mortgage rates fall until early to mid-2023.
The average rate on a 30-year fixed mortgage is 6.92%. This figure has more than doubled since January of this year. At current long-term rates, the average monthly mortgage payment is more than 50% higher than this time last year.
The tightening affordability has also affected potential sellers who are reluctant to purchase a new home at a higher mortgage rate.
Overall, the U.S. housing market is now in a state of renewed stagnation, similar in magnitude to the pre-epidemic market downturn, but for very different reasons.
This time, demand has fallen as mortgage rates have soared, but prices are being supported by inflation and a decline in the number of homes for sale.
Many Americans stayed put because they moved during the epidemic when mortgage rates were at their lowest, so they have no incentive to move now.
Home prices are reportedly falling as sellers try to attract cautious buyers, with the median home price falling 0.5% to $403,797 in September, but still up 8% year-over-year.
In addition,, the homebuilder confidence index fell for the 10th consecutive month to its lowest level since 2012
Meanwhile, new home starts fell 8.1 percent in September, with new single-family housing starts falling to a two-year low.