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By Danial Clark

Rising mortgage rates and record-high prices weigh on U.S. housing market

Rising mortgage rates and economic weakness are beginning to weigh on the U.S. housing market.

 

Sales of new single-family homes tumbled to a two-year low in April as higher mortgage rates and record prices squeezed first-time buyers out of the housing market. New home sales plunged 16.6% to a seasonally adjusted annual rate of 591,000 units last month, the lowest level since April 2020. Sales dropped 5.9% in the Northeast, and tumbled 15.1% in the Midwest. They plummeted 19.8% in the densely populated South, and decreased 13.8% in the West. 

 

The median new house price in April soared 19.6% from a year ago to a record $450,600. The average house price surged at a much faster 31.2% to $570,300. 

 

Last week, the National Association of Realtors (NAR) reported that existing home sales dropped to the lowest level since the onset of the COVID-19 pandemic. NAR Chief Economist Lawrence Yun said he expects sales to decline further. Average rates on 30-year fixed-rate mortgages are now firmly above 5%, for the first time since 2011. 

 

Tomorrow, investors will get the latest pending home sales data, which measures housing contract activity based on signed real estate contracts. 

 
New Home Sales 2022
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