As mortgage rates rise toward 7% over the coming months, Mr. Yun predicted a slow market for the rest of the year. This almost guarantees a continuation of the decline in home sales, possibly through the first half of 2023 when combined with a lack of housing inventory and rising home prices.
While new-home sales are expected to decline by 20.9%, NAR predicted that existing-home sales will fall by 15.2% in 2022.
Home sales will increase in the second half of 2023, but overall they will decline by 7.1%, according to Mr. Yun.
“The direction of mortgage rates—upward or downward—is the prime mover for home buying, and decade-high rates have deeply cut into contract signings,” NAR Chief Economist Lawrence Yun said.
“If mortgage rates moderate and the economy continues adding jobs, then home buying should also stabilize.”
Although there is some hope, it is likely that pending home sales will continue to decline across the nation as mortgage rates rise and show no signs of abating.
The West experienced modest monthly gains despite having some of the least affordable home prices in the nation, while the Northeast, Midwest, and South struggled with pending sales.
Despite being down 31.3% from August 2021, its pending sales index increased by 1.4% in August. In the Northeast, pending sales decreased by 19% from the previous year, while the Midwest index decreased by 21.1% annually.
As mortgage rates rise toward 7% over the coming months, Mr. Yun predicted a slow market for the rest of the year.
This almost guarantees a continuation of the decline in home sales, possibly through the first half of 2023, when combined with a lack of housing inventory and rising home prices. While new-home sales are expected to decline by 20.9%, NAR predicted that existing-home sales will fall by 15.2% in 2022.
Probably the best time to buy is 2023
“Home sales will pick up in the second half of 2023, but will be down by 7.1% overall,” Mr. Yun said.
The direction of mortgage rates is the primary driver of home buying, and as rates continue to rise, we can expect to see a continued decline in home sales. This is especially true in markets where home prices are already unaffordable and inventory is low.
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