Rising US interest rates designed to slow inflation have priced more than 9 million homebuyers in America out of the housing market since the start …
Rising US interest rates designed to slow inflation have priced more than 9 million homebuyers in America out of the housing market since the start of the year, according to a leading property economist. Nadia Evangelou, senior economist and head of forecasting at the National Association of Realtors, said more than 3 million millennials had been priced out of buying a home since January, with the average monthly price of paying off a home in the US rising by nearly $270. The US Fed has increased interest rates twice this year, with six more rate hikes expected by the end of 2022. That has already led to a big jump in mortgage costs, with the 30-year fixed-rate average now exceeding 4.7%, after beginning the year around 3%. Evangelou said affordability had fallen through the pandemic as house prices rose more quickly than incomes. At the same time, more people were buying second homes with their increased equity, while cash transactions and purchases by investment groups jumped. In California, the NAR said the monthly cost of paying off the median mortgage is nearly $500 more than in January, with fewer than 30% of first-time buyers in the state able to buy a home. The NAR estimates investors make up 22% of buyers across the US, compared with 15% a year ago, while all-cash offers account for 27% of purchases against 19% in early 2020. Conversely, the share of purchases by first-time buyers fell to 27% from 33% last year. “As more people compete for that smaller pool of homes, prices will go up,” Evangelou said.
