High rates and low inventory are contributing to the worst year for home sales since 2008, the year the housing bubble burst, according to National Association of Realtors projections. At its current pace, total existing-home sales in 2023 are projected to amount to 4.1 million according to NAR. That would be th lowest number since the subprime mortgage crisis of 2008—a year that also saw the unemployment rate spike to nearly 8% and millions of Americans home equity evaporate. By comparison, there were more than 6 million home sales in 2021, NAR data shows. The “lock-in effect” can also explain the slowing of existing-home sales. Normally, existing homeowners looking to move or trade up are responsible for a large portion of homes on the market. Current homeowners who bought when rates were below 3% during the pandemic are reluctant to sell and reenter the market as mortgage rates are climbing toward 8%.
Mortgage Rates Approach 8%
Mortgage rates continued to approach eight percent this week, further impacting affordability. In this environment, it’s important that borrowers shop around with multiple lenders for the best mortgage rate. With research showing down payment is the single largest barrier to first-time homebuyers attaining homeownership.
