But that still doesn’t reflect the recent jump in mortgage rates to 4.5%.
Wolf Richter for WOLF STREET.
So, the data on existing home sales released today by the National Association of Realtors was for February, and in February, average mortgage rates were much lower than they are today. According to the Mortgage Bankers Association weekly index, in mid-February, the average corresponding 30-year fixed-rate mortgage just topped 4% for the first time since 2019.
According to Mortgage News Daily, the average 30-year fixed-rate mortgage hit 4.50% yesterday, the highest since March 2019. Since last fall, the average rate has jumped 1.5 percentage points, from 3% to 4.5% (chart via Mortgage News Daily):
In its November report, the National Association of Realtors expected the average 30-year mortgage rate to reach 3.70% by the end of 2022. Now it is only March 2022, and we are already at the level of 4.5%. It’s happening fast. Last month I suggested that 4% could be the magic number after which the housing market will feel it.
It’s no secret that as mortgage rates rise, more and more buyers are paying for these exorbitant prices, and they are leaving the market.
But among buyers who still qualify, rising mortgage rates are causing a frenzy to buy something “now,” no matter the price, no questions asked, and they shy away from checks and take huge risks – even NPR sent something like a warning. about it yesterday, lol – lock in still available mortgage rates before they rise even more.
There is a well-established pattern: sales activity picks up in the early stages of the mortgage rate hike cycle, and we’ve seen some of it, but it’s becoming impossible for a growing number of potential homebuyers.
Sale of previously owned houses, apartments and cooperatives in February fell 7.2% in February compared to January and 2.2% year on year, to a seasonally adjusted annual rate of 6.02 million homes, the seventh consecutive month of decline year on year (historical data) via YCharts). ):
“Housing affordability continues to be a major concern as buyers are hit with a double whammy of rising mortgage rates and sustained price increases,” NAR said in a press release. He pointed out that monthly payments have increased by 28% compared to last year. “Some who were previously eligible for a 3% mortgage rate can no longer buy at a 4% rate,” the report says.
Home sales peaked in 2003–2006. The current epoch remains well below that peak. The seasonally adjusted annual sales figure of 6.02 million sales in February was also well below the peak of the pandemic, but higher than in previous years.
Sale of private houses fell 7.0% mom and 2.2% year on year, to a seasonally adjusted annualized rate of 5.35 million homes.
Sale of apartments fell 9.5% MoM and 4.3% YoY to 670,000 seasonally adjusted apartments.
By regionpercentage change in seasonally adjusted annual home sales in February compared to January and year on year (y/y):
- Northeast: -11.5% since January, -12.7% y/y.
- Midwest: -11.3% since January, -1.5% y/y.
- South: -5.1% since January, +3.0% y/y.
- West: -4.7% since January, -8.3% y/y
And here are the new announcements. The number of homes listed for sale in February jumped 13.4% year-on-year after jumping 13.2% in January and down just 3.0% from February 2020.
New listings emerge from the tree as interest rates rise and volume stalls because now, all of a sudden, it’s time to put an extra house on the market before the market turns around. In February, the number of new quotes almost returned to the normal range for February after being extremely low for the past two years. Green lines connect February houses (source: realtor.com real estate database):
Offer of houses for sale rose from a record low in January to 1.7 months of sales. The number of unsold homes on the market rose 2.4% from a record low in January to a seasonally adjusted 870,000.
Average price marked compared to January and up 15% year-over-year to $357,300. Splashes compared to last year peaked in May and June last year and amounted to more than 23%. The seasonal peak of the average price was in July 2021 at $362,800:
The share of investors in sales remains approximately at the level. “Individual investors or existing homebuyers who do most of their sales for cash” accounted for 19% of transactions in February, up from 22% in January, but up from 17% in February 2021. the same range, accounting for 25% of transactions in February, up from 27% in January, but up from 22% in February 2021.
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