US housing market cools as mortgage rates hit 7%

by@business

Summary

The recent increase in mortgage rates above 7% has significantly dampened the US housing market, leading to sellers reducing prices last month as the number of buyers dwindles. This trend follows a sharp drop in pending home sales in September, which fell to the lowest level since 2014, excluding the initial Covid-19 impact. Additionally, over 20% of active US listings experienced price reductions, marking the highest share recorded by Redfin for this time of year, indicating that the few buyers remaining hold substantial leverage in negotiations.

Analysis

US housing market: The US housing market is the national system of residential home sales, listings, prices, financing, and construction. In the reported development, mortgage rates above 7% have weakened buyer demand, pushed pending sales sharply lower, and given remaining buyers more negotiating power as sellers reduce asking prices. Pending sales: Pending home sales fell sharply in September to their lowest level since 2014 outside the initial Covid-19 shock. Buyer leverage: More than one in five active US listings had a price reduction during the period tracked by Redfin, the highest share for that time of year in its records. Mortgage rates: The average US 30-year fixed mortgage rate rose further above 7% in early October, reaching its highest level since late 2023.

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macropolitics

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