According to the National Association of Realtors®, existing U.S. home sales totaled 5.03 million last year which was a 17.8% decline from 2021. That is the weakest year for home sales since 2014 and the biggest annual decline since 2008 (which was during the housing crisis of the late 2000’s). Although this has resulted in significantly lower buyer demand and some lowering of home prices, we still saw home prices that finished the year 10% higher than the previous year. Of course, none of this is surprising given the current economic landscape, particularly the inflation crisis. Ultimately, the Federal Reserve has been implementing aggressive interest rate hikes which have directly punished the housing market in the form of higher mortgage rates. Fortunately, some measures of inflation have eased recently which may offer some slight relief for home buyers.
Good news for home buyers
Although the quick rise in mortgage interest rates over the past year has been bad news for home buyers, there have been some signs of relief recently. As of the end of January 2023, the average long-term U.S. mortgage rate declined for the fourth week in a row. For example, at the time of this article, the 30-year, fixed-rate loan moved to 6.09%. This was a decrease from 6.13% the prior week and marked the fourth straight week of rate drops. For perspective, the 30-year, fixed-rate loan reached 7.08% in October 2022. (Of course, the average 30-year, fixed-rate loan was 3.55% the year prior.) Nonetheless, the slight drops in mortgage interest rates equates to savings for home buyers.
Florida monthly housing payment changes (Oct.-Dec. 2022)
- Miami: Down 8.3%, a monthly savings of $1,477
- Jacksonville: Down 7.4%, a savings of $265
- Fort Lauderdale: Down 6.7%, a savings of $176
- West Palm Beach: Down 6.5%, a savings of $186
- Tampa: Down 5.5%, a savings of $139
- Orlando: Down 5.5%, a savings of $144
Summary
There is no doubt that the rapid rise in mortgage interest rates over the past year has throttled the housing market. In fact, sales of existing homes have fallen for 11 straight months to their lowest level in more than a decade. With home prices already high, these significantly higher mortgage rates can have significant impact on housing costs. On the bright side, some measures of inflation have eased in recent months. Hopefully, this will also result in less interest rate hikes from the Federal Reserve as we move into later in the year.
Are you looking to buy or sell a home in South Florida? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, don’t forget to download our free and comprehensive home search app!
