WASHINGTON–With mortgage rates having climbed to the highest level in more than two decades, credit union members and other consumers are now facing a “split-screen market in housing,” according to a new report.
As CUToday.info has reported, sales of existing homes have fallen sharply, but new homes are selling fast, as the lack of "For Sale" signs has driven the market.
According to NPR, those factors have made for five things people should know about the housing market, and suggest ways credit unions should be helping members.
Those five things include:
Would-Be Buyers Are Being Priced Out of the Market
“The Federal Reserve's aggressive interest rate increases since last year have led to much more expensive mortgages,” NPR reported. “That's casting a wet blanket over the housing market. Sales of existing homes in July were down almost 17% from a year ago, according to the National Association of Realtors. The average interest rate on a 30-year home loan hit 7.23% this week, the mortgage giant Freddie Mac says — the highest since 2001. That means the monthly payment on a $300,000 loan is now about $330 more than it was last summer.”
Many Sellers are Sidelined as Well
Anyone who bought or refinanced a home in recent years likely has a mortgage with a significantly lower interest rate, so selling would be a costly proposition, the report reminded. Indeed, about 15% fewer existing homes were on the market in July than a year ago.
Bidding Wars are Still Common
“Fewer existing homes are changing hands these days, but surprisingly, there has been little or no break on prices, and buyers who are in the market are still willing to pay up,” NPR reported. “In fact, the average existing home sold in July cost nearly $407,000 — an increase of 1.9% from a year ago. More than a third of homes sold for more than their asking price last month.”
New Homes are in High Demand
With so few existing homes to choose from, more would-be buyers are turning to new construction, with NPR noting sales of new homes in July were up more than 31% from a year ago. “While the average price of a new house rose slightly last month, prices have generally been trending down since the beginning of the year,” NPR said. “A survey by the National Association of Home Builders found about 25% of builders have been cutting prices to bolster sales.
Small is the New Big
Builders offering discounts have been helped by falling costs for lumber and other materials, but they've also been designing somewhat smaller houses in an effort to keep prices in check.
NPR noted the average size of a new house has fallen from about 2,350 square feet at the end of 2021 to about 2,200 square feet today, according to the National Association of Home Builders.
How to Get the Daily CU News Headlines In Your Inbox Each Day, For Free!
The biggest, best and freshest news reporting in credit unions remains free in ’23! Each morning CUToday.info delivers its daily Fresh Today news update offering the latest headlines and breaking news right to your email, with the easy-to-read headlines format allowing you to click on the stories that interest you most in order to learn more.
If you haven’t yet signed up for the new email solution on which CUToday.info has partnered with ResponseGenius, you can do so here. Signing up requires less than one minute of your time—and it’s free!
Please note that after signing up you may need to go to your Spam/Junk folder and mark the morning headlines email as safe. CUToday.info does not provide its list of readers and emails to outside parties, and we will not be contacting you to sell you an extended warranty or sending you any links so you may cash in on an inheritance you didn’t know was coming.
And did we mention it’s free?
Please note and/or make your IT department or email administrator aware the emails will be coming from the domains CUTodayinfo.com and CUTodayinfoReply.com.