According to the Wall Street Journal (WSJ), interest rates have risen to 5.25% this week, up from 3.1% at the start of the year.
New house sales declined 16.6% in the latest month as rising interest rates make home ownership more difficult for many families.
The decline in new house sales this month is the largest in a single month since 2013, as per the outlet.
Margaret Whelan, CEO of Whelan Advisory, told the Wall Street Journal, “The largest purchase category, the entry-level consumer, is shifting to the sidelines.”
Sales plunge as prices stay high.
Stagflation in Housing.
The economic mess brought to you by the inflationary madness of Biden-Pelosi-McConnell pic.twitter.com/rYwMCmsXPi
— Steve Cortes (@CortesSteve) May 24, 2022
According to the WSJ, the S&P CoreLogic Case-Shiller National Home Price Index, a measure of gauging average home prices in major metropolitan regions, home prices jumped 18.8% last year.
The Wall Street Journal reported, that the National Association of Realtors reported that fewer people are buying homes for the first time this year, down from 33% the year before.
Despite the Fed raising interest rates, home values continue to grow. According to Reuters, a February poll of 33 property analysts predicted that housing prices in the United States would rise 10.3% this year. The median price of a home increased to $375,000 in March of this year.
In March, property prices in the United States reached a record high of $375,000, the highest level in 15 years.
U.S. home prices hit a record of $375,300 in March and analysts expect prices to climb even more, despite higher mortgage rates pushing some buyers out of the market #WSJWhatsNow https://t.co/z1W1SMwBi3 pic.twitter.com/0vSfIRlZKQ
— The Wall Street Journal (@WSJ) April 21, 2022
Home values set a new high across the country as a result of the combination of ultra-low loan rates in 2020, restricted housing availability, and a surge in home sales during the COVID-19 lockdowns.