Did Someone Rewind to ‘95?

Did Someone Rewind to ‘95?

The September Fannie Mae Economic Developments Report forecasts that existing home sales may reach a 30-year low this year, mainly due to affordability constraints and high mortgage rates. Despite a 20% increase in homes available for sale nationally, demand remains low, particularly in Sun Belt regions. Additional findings:

• Home Sales: Existing home sales are expected to reach their lowest level since 1995.

• Supply-Demand Imbalance: Although inventory has increased nationally, demand has not kept pace, resulting in fewer sales.

• Economic Slowdown: Slower GDP growth and consumer spending contribute to weaker housing market conditions.

• Future Outlook: Sales are projected to improve in 2025 if mortgage rates decline.

Ralph’s Take

Further declines in mortgage rates are essential to address affordability issues and stimulate home sales. Despite the recent drop in mortgage rates, home purchase activity remains stagnant due to ongoing affordability challenges and the persistent — but gradually improving — lock-in effect, where homeowners with low mortgage rates are reluctant to sell. Looking ahead, Fannie Mae predicts a 9.8% increase in home sales and the 30-year mortgage rate to fall further to 5.7% by the end of 2025.

Tags

• Housing Market Update (7)
• Home Sales (2)
• Lock-In Effect (1)