Key Takeaways:
- Pre-owned home sales has declined in the US
- The high mortgage prices and short supplies have pushed prices up
- The drop will have a significant impact on the US Economy
YEREVAN (CoinChapter.com) — Sales of pre-owned homes in the United States have experienced a decline of 2.2% in July compared to June, dropping to a seasonally adjusted annual rate of 4.07 million, according to the National Association of Realtors. Amid rising mortgage prices, this marks a fall to the lowest level in six months.
As per the media analysis of the latest figures, the drop was primarily driven by homeowners with favorable mortgage rates refraining from selling their properties. The cost of securing new mortgages for another home has reached the highest levels in decades. As a result, those looking to sell their properties to buy a new home are holding back.
The relatively small inventory of available homes in the market also indicates this. In the previous month, there were a total of 1.11 million pre-owned homes for sale.
This figure marked a 3.7% increase from the previous month but still represented a decline of 14.6% compared to July of the previous year. It is also about half of the pre-Covid supply.
The exuberant mortgage rates also discouraged many would-be homeowners from acquiring a house.
Sales experienced drops in the Northeast, Midwest, and South regions, while they saw an increase in the West, according to the report.
Declining Pre-Owned Home Sales Impacts the US Economy
As prospective homebuyers grapple with mounting financial barriers, the decline in pre-owned home sales will influence the broader US economy.
At the heart of this issue lies the housing industry itself. The decline in housing sales will have a pronounced impact on real estate agents and brokers. Professionals in this sector face reduced transaction volumes, leading to decreased commissions and incomes.
With fewer buyers entering the market, the competition for a limited number of potential clients intensifies, placing further pressure on earnings. This phenomenon also extends to mortgage brokers and title companies, whose revenues are intertwined with the health of the housing market.
The decline in home sales also impacts the Labor market. Based on calculations by the National Association of Realtors, each home sale creates two jobs in the United States. Applying this proportion, a total of 2,000 jobs are created for every 1,000 homes sold. A decline in sales also causes a decrease in job opportunities.
The drop in home sales also significantly impacts the financial sector as well. It is this sector that facilitates the home purchase process. Mortgage lenders grapple with a shrinking pool of borrowers, resulting in reduced revenue from origination fees and interest payments.
High mortgage prices often translate to stricter lending standards, limiting access to credit and dampening consumer spending. This, in turn, affects banks, which rely on consumer activity to fuel economic growth.
From the housing industry itself to construction, finance, consumer sentiment, and even local governance, the effects are profound and interwoven.
