Home Sales Record Lowest As Mortgage Hits Highest Bar for 2023
The United States saw a decline in new home ownership this month as new mortgage rates reached the highest rates in the year 2023.
According to a joint report from the US Department of Housing and Urban Development and the Census Bureau, sales of newly constructed homes fell 5.6% in October to a seasonally adjusted annual rate of 679,000, from a revised rate of 719,000 in September.
This year has seen the worst decline in the sale of existing houses in the last 30 years. Many people prefer to buy newly constructed property as this seems to them a better investment as compared to buying an existing house and then spending fortunes on its renovation.
Also, new home builders often offer more financing options for homebuyers. They usually buy down mortgage rates to make their offerings more attractive than the resale market.
“The constrained resale home market has continued to benefit the new home market because new homes are often the only option readily available as many owners continue to remain in place with their favorable interest rates,” said Kelly Mangold of RCLCO Real Estate Consulting.
According to some experts, the interest rates are expected to lower next year prompting more buyers to look forward to a new home purchase.
Homeowners with ultra-low mortgage rates of 3% or 4% are reluctant to sell and purchase another property at a significantly higher rate due to an ongoing shortage of inventory and an affordability crunch. Average weekly rates for a 30-year fixed-rate loan show that rates topped 7% in August and reached as high as 7.79% by the end of October as the Federal Reserve continues to combat inflation.
