In the neighborhood of downtown Washington, you’ll find a house with a sign indicating that you have a sales contract.
Jim Bourg | Reuters
According to the National Association of Real Estate Agents, in the harshest signs of the busiest season in the home market, pending home sales, which measure signed contracts for existing homes, fell 4.1% compared to January.
Sales were down 5.4% compared to February 2021. Analysts expected a slight increase. This is the fourth consecutive month of decline in pending sales, an indicator of future financial results in the next 1-2 months.
This count is based on a contract signed in February when mortgage rates actually began to rise, so how the market reacts to the new interest rate environment, especially when entering the critical spring season. It is a powerful indicator of what you are doing.
Prices began to rise in January and continued to rise sharply in February. The average interest rate on a 30-year fixed mortgage is above a full percentage point than it was a year ago.
Regionally, pending sales increased 1.9% month-on-month in the northeast, but decreased 9.2% from a year ago. In the Midwest, monthly sales were down 6.0%, down 5.2% from February 2021. In the south, monthly sales decreased by 4.4% and annually by 4.3%, and in the west, monthly sales decreased by 5.4% and decreased by 5.3%. one year ago.
Spring has historically been the busiest season in the housing market, so the mortgage rate surge did not come at its worst.
“Most of my buyers are adjusting their goals to buy homes that can be bought at higher rates,” said Paul Leger, a buyer’s agent for the Joel Nelson Group in Washington, DC. Mortgage rates and entry into real estate. At least in my market, buyers aren’t choosing to rent as an alternative. “
Potential buyers today are facing expensive markets. The median monthly payments for new mortgages now make up a much larger percentage of the average consumer’s income. February surged 8.3% compared to January, according to a new index from the Japanese Bankers Association of Mortgages. It is nearly 22% higher than in February 2021. For borrowers at the bottom of the market, their monthly payments are increasing by nearly 10% each month.
“The 30-year fixed-rate mortgage surged 73 basis points from December 2021 to February 2022. With the increase in loan applications, the median principal and interest payments for mortgage applicants in February It surged $ 127 from January and $ 337 a year ago. ” Edward Seiler, Vice President of Housing Economy, MBA.
Buyers continue to face tight and expensive markets. Now they have to take inflation into account in other parts of the budget as well. According to Realtor.com, home prices have risen again after being given a temporary grace last fall.
George Ratiu, Senior Economist at Realtor.com, said: “But as mortgage rates approach 5%, there are signs of change in housing fundamentals as many looking for a home have reached the upper limit of their ability to buy a home.”