The share of for-sale homes with price drops reached a new high during the four weeks ending June 12 as rising mortgage rates turn a growing number of buyers away from home purchases. The most recent rate hike means that the typical buyer with a 30-year fixed-rate mortgage now faces a monthly payment of $2,514, up from $1,692 a year ago, and as expected, buyer demand is taking a hard hit, Redfin reports.
Buyers who can still afford home purchases are likely to find significantly reduced competition in the coming months, but those who are already priced out have a long waiting period ahead of them before the market cools enough for overall prices to drop.
“The housing market isn’t crashing, but it is experiencing a hangover as it comes down from an unsustainable high,” said Redfin deputy chief economist Taylor Marr. “Housing demand has already cooled significantly to the point that the industry has begun facing layoffs. This week’s rate hikes will further stretch homebuyers’ budgets to the point that many more may be priced out. While a lot of home sellers are already dropping their prices, more homeowners will likely decide to stay put now that the mortgage rate on a new home is significantly higher than their current one.”
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