More people searched the internet in 2022 for terms like “when is the housing market going to crash” than at any time since the 2007 subprime mortgage crisis, according to Google Trends data.
In two-thirds of major regional housing markets — 98 out of 148 — prices are dropping, especially in more expensive locations. That doesn’t mean the market is crashing — prices are still higher than they were a year ago — but for people priced out of the housing market, it feels like a move in the right direction.
Sales of previously owned homes fell 35.4 percent in November compared to a year ago — the 10th straight month of declines and a record dating back to 1999, the National Association of Realtors said.
Existing-home sales have dropped about 37 percent from their recent peak in January. Existing-home sales fell the most month-over-month in the West, down 12.5 percent, and in the South, down 7.1 percent.
Many shoppers were priced out of the market when the Federal Reserve raised interest rates, pushing mortgage rates to more than 7 percent in early November, up from 3.1 percent at the end of 2021. That increase made mortgage payments prohibitively expensive for many buyers, Wall Street Journal reported.
The median existing-home price fell month over month for the fifth straight month in November to $370,700, the National Association of Realtors said. That still represented a 3.5 percent increase in November from a year earlier.
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The central bank raised interest rates seven times in 2022, including in November and last week to try and fight high inflation by slowing down spending, hiring and investment. Fed officials signaled plans last week to keep raising interest rates in 2023.
Cooling off the overheated housing market is key to process because weaker home sales mean related spending on renovations, furniture and landscaping.
Applications to refinance a home loan increased by 6 percent last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. The volume of applications was still 85 percent lower than the same week a year ago.
The average interest rate for 30-year fixed-rate mortgages with loan balances of $647,200 or less decreased from 6.42 percent to 6.34 percent, with points decreasing from 0.64 to 0.59 for loans with a 20 percent down payment, CNBC reported. Rates are still more than twice what they were a year ago in what has historically been the slowest time of the year for housing.
Consumer confidence is up sharply in the U.S. to its highest since April due to easing inflation pressures and a resilient labor market, according to the private research group the Conference Board. Its consumer-confidence index jumped from 101.4 in November to 108.3 in December.
Homes sold in November were on the market for around 24 days, up from 21 days in October, NAR said.