Home sales fall to lowest level since the financial crisis – Politico
2025-04-24T17:00:52Z
The slump is especially noteworthy because sales typically pick up in March as the spring buying season gets underway.
“I had anticipated that with more inventory we’d see more transactions, but the data make it clear that mortgage rates and affordability challenges are holding back buyers,” said NAR Chief Economist Lawrence Yun.
Home sales have been sluggish in recent years thanks to a combination of high prices — home values soared over the course of the pandemic — and elevated mortgage rates.
Mortgage rates rose to 7.8 percent in 2023 — after having fallen to as low as 2.7 percent in 2020 — posing a double threat to the market: They make monthly payments for potential buyers much more expensive, and they discourage people from selling their homes because they don’t want to give up their low rate.
While 2023 and 2024 were plagued by low inventory as a result of the lock-in effect, economists expected a rebound in sales starting this year.
“It looks like the mortgage rate is the magical influence for the housing market,” Yun said. “It’s definitely possible that the swings in the stock market in recent times may have also shocked some people into pulling back” from plans to purchase a home, he said.
Mortgage rates typically move with the 10-year Treasury yield, which has risen this month against wider volatility caused by the specter of a trade war. As of Thursday, the yield was 4.3 percent, and the interest rate on a 30-year fixed mortgage was 6.8 percent, according to Freddie Mac.
“Under the normal spread between the 10-year and mortgage rates, the mortgage rates today should be about 6.3 percent or even 6 percent, but instead we’re closer to a 7 percent rate,” Yun said.
The higher rate is “likely because the [Federal Reserve] is selling [mortgage-backed securities],” Yun said, and “it’s also possible that some of the foreign countries that are holding on to U.S. MBS are selling MBS back onto the market to hurt the mortgage rates, maybe purposely, as part of the trade war positioning.”
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