(PatriotWise.com)- Newly released data is the latest indicator that increasing mortgage rates and higher prices are reducing demand for property in the United States. The number of contracts to buy previously owned homes in the United States has fallen.
The National Association of Realtors (NAR) said on Thursday that its Pending Home Sales Index, which is calculated based on contracts that have been signed, decreased by 3.9 percent to 99.3 in the previous month. This marked the sixth consecutive monthly reduction, and as a result, contracts had fallen to their lowest level since April 2020, when activity was suppressed as a result of COVID-19 lockdowns.
Pending house sales had a decline in the Midwest, while increases were seen in the Northeast, West, and South. Contracts, which often become sales after a month or two have passed, are expected to fall by 2.0 percent, contrary to what economists had predicted. Compared to the previous year, the number of pending house sales was down 9.1 percent in April.
The data released last week indicated that sales of previously owned houses dropped to their lowest level in almost two years. This occurred when housing prices reached an all-time high due to a continuous scarcity of inventory. Also at a two-year low are sales of newly constructed homes.
The National Association of Realtors (NAR) estimates that the cost of owning a home increased by more than 25 percent in comparison to the same time last year, with higher property prices adding an additional 15 percent to this total.
According to the statistics provided by the home financing firm Freddie Mac, the average interest rate for a 30-year fixed-rate mortgage is 5.25 percent.
Since March, the Federal Reserve has implemented a policy interest rate increase that brought the total increase to 75 basis points. At each of its subsequent policy sessions in June and July, the Federal Reserve of the United States is anticipated to increase that rate by a half of a percentage point.