As mortgage rates climb and housing affordability hovers near an all-time low, existing home sales have declined for eight consecutive months – every month in 2022 – reaching the lowest level since June 2020. Buyers are unable to keep up with rising housing costs and sellers are unwilling to trade their low rates for much higher payments, causing both demand and supply to pull back — and sales to decline.
For potential sellers, the cost of entering this market has increased. The average rate on outstanding mortgages is 3.3% today while current market mortgage rates are pushing towards 7% according to Freddie Mac. As a result, fewer homes are coming on the market.
The slower market pace and the recent slight increase in inventory will give some home buyers – those who can still afford it – an easier time navigating the market than at any point throughout the Covid-19 pandemic. However, the supply pullback means affordability challenges will persist for those who have been pushed to the sidelines and sales volume will likely remain subdued in the near term.