Inflation and the resulting increase in interest rates continued to dent home sales activity into the fall. The National Association of Realtors® (NAR) said on Friday that its Pending Home Sales Index (PHSI) which tracks purchase contracts for existing homes, dropped by another 10.2 percent in Septembe r, the fourth straight month that the index has declined. The month’s reading, 79.5, is 31.0 percent below its level in September 2021. [pendinghomesdata] The index was benchmarked at 100 in 2001. It is considered a leading indicators of existing home sales over the following one or two months. “Persistent inflation has proven quite harmful to the housing market ,” said NAR Chief Economist Lawrence Yun. “The Federal Reserve has had to drastically raise interest rates to quell inflation, which has resulted in far fewer buyers and even fewer sellers .” Yun noted that multiple years of rock-bottom interest rates have created a “lock-down” effect. Many homeowners are unwilling to list their homes and give up their current 3 to 4 percent mortgage interest rates. “The new normal for mortgage rates could be around 7 percent for a while,” he said. “On a $300,000 loan, that translates to a typical monthly mortgage payment of nearly $2,000, compared to $1,265 just one year ago – a difference of more than $700 per month. Only when inflation is tamed will mortgage rates retreat and boost home purchasing power for buyers.”
Related Articles
US economy in ‘uncharted waters’ as inflation falls with low unemployment -study
August 11, 2023
Mark Paul Cervantes
Economy, Inflation, Top News, U.S. Market
Comments Off on US economy in ‘uncharted waters’ as inflation falls with low unemployment -study
WASHINGTON -U.S. Federal Reserve officials are in “uncharted waters” with no clear historical guide as they set monetary policy in an environment with inflation falling but no increase as yet in the unemployment rate, Richmond […]
UK headline inflation rate drops sharply to 6.8% in July, in line with expectations
August 16, 2023
Mark Paul Cervantes
Economy, Inflation, International, Top News
Comments Off on UK headline inflation rate drops sharply to 6.8% in July, in line with expectations
The headline CPI reading was in line with a consensus forecast among economists polled by Reuters, and follows the cooler-than-expected 7.9% figure of June. Core inflation — which excludes volatile energy, food, alcohol and tobacco […]
Morning Bid: Inflation, rates worries supersede Russia stress
June 27, 2023
Mark Paul Cervantes
Economy, Inflation, International, Top News
Comments Off on Morning Bid: Inflation, rates worries supersede Russia stress
June 27 (Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist. Asian markets on Tuesday are set to open on the defensive, pressured by worries over inflation […]