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Last updated on April 26th, 2021 at 09:02 am
As the home prices rise it dissuades more potential buyers and still the housing market is more competitive than ever.
According to Mortgage News Daily, at the end of January, the average rate on the 30-year fixed mortgage hit its last low of 2.75% and then started climbing steadily. After a sizeable move overnight, it now stands at 3.45%.
Matthew Graham, chief operating officer at Mortgage News Daily said, from the start of February, the total hike is almost 75% more in 6 weeks.
But the insatiable demand in many metro areas is keeping the housing market afloat.
According to CoreLogic, though the mortgage rate is the same as this time last year the home prices have shot up to over 10% this is purely due to the shortage in supply of homes for sale.
As the homebuilders are facing higher costs for land, labor, and materials they are not stepping up.
Due to the pandemic, there is also experience of delays in getting materials to job sites. Leading to rising in the backlog of unbuilt homes.
Robert Dietz, chief economist of the National Association of Home Builders said, over the last 12 months there has been a 36% gain in permit of single-family homes but the projects have paused due to cost and non-availability of materials.
The single-family home building is forecasted to expand in 2021, but at a slower rate due to the same reasons.
According to a new calculation by the NAHB, in 2021 a new home with an estimated median price of $346,757 with a 3% rate and 30 years fixed-rate mortgage a quarter percentage point increase in the interest rate would price out approximately 1.3 million households.
The higher mortgage rates have aggravated the supply crunch of existing homes.
If the homeowners sell their homes they would have to buy their next home at a higher interest rate which is not helping the situation.
According to realtor.com compared to the same time last week in 2020, the number of newly listed homes for sale was 24% lower.
Now the total number of homes for sale is half of what it was last year.
With this challenge, even in today’s higher rate environment buyer demand has not fallen off much, on average, homes are selling seven days faster than in 2020.
According to Redfin, a real estate brokerage just over a third of homes sold in February went for more than their original asking price.
Reference Source: CNBC
