Young families like Evan Paul and his wife were ready to buy a home at the beginning of 2022. They said when they first started their search, houses were being bought up way above their listing prices due to low interest rates at the time. “There’d be, you know, two dozen other offers and they’d all be $100,000 over asking,” says Paul.
Then came the Fed’s rate hikes, and the Pauls could no longer afford the homes they’d been looking at. The quick increase in mortgage rates cast a chill on the housing market. Buyers stopped searching; no longer able to afford homes they were considering a year ago.
Home prices have remained mostly high despite the drop in sales because inventory remains low. “People are stuck,” says Lawrence Yun, chief economist with the National Association of Realtors.
Yun and others describe the market as frozen since sales activity has declined for 10 months straight, according to NAR. It’s the longest streak of declines since the group started tracking sales in the late 1990s.
“The sellers aren’t putting their houses on the market and the buyers that are out there, certainly the power of their dollar has changed with rising interest rates, so there is a little bit of a standoff,” says Susan Horowitz, a New Jersey-based real estate agent.
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