There is no doubt that consistently rising mortgage rates combined with out-of-control inflation and a dragging economy has left a mark on the housing market. In fact, existing home sales in the United States hit their lowest point since 2008 in September 2023, according to the National Association of Realtors®. The seasonally adjusted annual rate of sales fell 15.4% from September 2022 to 3.96 million units. This is the lowest level of seasonally adjusted sales since January 2010.
The decline in existing home sales is being driven by a number of factors, including rising mortgage rates, high home prices, and low inventory. Mortgage rates have been rising steadily all year, and they are now at their highest level in over a decade. This is making it more expensive for buyers to afford a home.
A drop in purchase mortgages = a drop in existing home sales
According to the Mortgage Bankers Association (MBA), purchase mortgages dropped in late September to the lowest levels since 1995. Thus, this is a strong indication that existing home sales will remain depressed for the coming months. This significant slowdown in home buyer activity has already had impacts on existing home sales. In fact, almost 18% of homes listed in the month of September have already implemented price reductions. This is the highest level of price reductions that we have seen since November 2022.
The housing market is expected to continue to cool down in the coming months. However, it is unlikely that we will see a crash since the fundamentals of the housing market are still strong. In South Florida in particular, we continue to see a relatively strong demand for housing. Should we see mortgage rates go lower next year, it is likely that more buyers will re-enter the housing market. This will once again increase the demand for housing.
Are you looking to buy or sell a property in South Florida? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, be sure to download the free Florida Home Search app for your smartphone or tablet.