According to the latest data from the National Association of Realtors (NAR), U.S. existing home sales increased by 3.4% month-on-month and 2.9% year-on-year in October, marking the first year-on-year growth since July 2021.
At the same time, the latest data from mortgage financing giant Freddie Mac showed that the loan-790">average interest rate on a 30-year standard fixed mortgage in the United States climbed to 6.84%, returning to a four-month high.
Mortgage interest rates remain high. Can the thaw in existing home sales continue? Or is it just a flash in the pan?
Many American real estate agents interviewed by China Business News believe that interest rate fluctuations are an important factor in determining home buying behavior. However, the demand for improved housing is more affected, and the demand for owner-occupied housing still exists. There is still a certain wait-and-see sentiment among buyers and sellers, and the market trend may change next spring.
The days of 2% mortgage interest rates are over
In the past three years, average loan-922">mortgage rates have more than doubled. On August 19, 2021, the 30-year fixed rate averaged 2.86%. As of November 21, the interest rate was 6.84%. After the Federal Reserve cut interest rates in September, U.S. mortgage interest rates did not fall in response, but continued to rise.
Kashif Ansari, co-founder and CEO of JuwaiIQI Group, a global real estate technology company, explained to China Business News: "U.S. mortgage interest rates closely follow the 10-year Treasury bond yields. U.S. Treasury bond yields have recently "It has been rising because the market believes that the U.S. economy is performing strongly and that the Trump administration's tax cuts and tariffs may mean rising fiscal deficits and inflation."
Data shows that the U.S. 10-year Treasury bond yield has soared from 3.62% on September 26 to the current 4.41%.
Three days after the results of the U.S. election came out, the U.S. real estate trading platform Redfin raised its forecast for the average 30-year mortgage interest rate in 2025 to 6.8%. Institutions such as Moody's Analytics and Capital Economics also expect the interest rate to remain around 7% next year. Oxford Economics also predicts that although Treasury interest rates have stabilized, given the risk of stronger-than-expected economic growth, a slower pace of interest rate cuts by the Federal Reserve, and the risk of the incoming Trump administration implementing inflationary policies on tariffs and immigration. , the agency still believes that interest rates face upward risks.
Chen Hongming, deputy general manager of Evergreen Real Estate in Washington, DC, the capital of the United States, predicted to a reporter from China Business News: "The loan interest rate may remain at around 6% in the short term. If there is a change, it may have to wait until the beginning of next year. In the past month, due to the rise in interest rates again Most of our buyers are in a wait-and-see mode, and the market has basically not changed much."
"In the short term, it is impossible for mortgage interest rates to return to the 2% level at the beginning of the epidemic. Bank loan interest rates are affected by too many factors. The inflation concerns in the United States are a stone that has not yet landed in the minds of investors." Ansari believes that because The mortgage interest rate for most American homeowners is around 4%. The mortgage interest rate needs to be reduced to 5% to encourage homeowners to list their homes and promote property market transactions.
The worst days may be over
While mortgage rates have risen for four straight weeks, home loan applications rose for a second week in a row, after two straight months of declines. According to the latest data from the Mortgage Bankers Association (MBA), mortgage application volume increased 1.7% in the week ended November 15 compared with the previous week.
The supply of housing has also increased. In October, the supply of homes for sale reached 1.37 million units, a year-on-year increase of 19.1%. But the increase in supply also partly reflects homes staying on the market longer, rather than an increase in listings. According to NAR data, properties stayed on the market for an average of 29 days in October, up from 28 days in September and 23 days in October 2023. Calculated at that month's sales pace, the amount of available inventory is equivalent to 4.2 months' supply. Although it is slightly lower than the 4.3 months in September, it is still well below the 6-month equilibrium level.
Becco Zou, an agent at the Kirkland branch of Seattle's Compass, an American real estate agency, told China Business News: "On the seller's side, due to uncertainty about the future trend of the market, many people have postponed their listing plans and it is not expected until next spring. re-listing, as spring is traditionally the peak time for home buying.”
NAR chief economist Lawrence Yun analyzed: "The worst period for home sales may be over, and the increase in inventory will bring more transactions. The increase in jobs and continued economic growth appear to be guaranteed. "This will lead to increased demand for housing, however, while mortgage rates remain high for most first-time buyers, they are expected to stabilize."
Ansari believes that in the current market environment, the best strategy for buyers is to "adapt and accept the new normal of high interest rates." Therefore, they may choose to buy a property first, and then refinance to reduce costs if mortgage interest rates drop in the future. . Otherwise, once interest rates drop, an influx of buyers into the market could push home prices up again.
Chen Hongming also said: "Generally speaking, we recommend that buyers not delay their home purchase decision just because they are waiting for interest rate changes. Home purchase should be decided based on their own needs and housing conditions. If it is a self-occupied home, it is recommended to buy it as early as possible; for investment properties, Then more consideration should be given to the return on investment of the home.”
Becco Zou observed that first-time buyers who are in urgent need of buying a home will still choose to buy a home, but most buyers who want to change their home are currently in a wait-and-see mode. “Buyers whose main need is to change their home are more picky about location and school district. In some areas, houses with good comprehensive conditions still require competition to purchase,” she said.
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