Since Sept 2021, the number of EXISTING home sales has gone flat as mortgage rates hovered in the 3.25%-3.75% rate and materially dropped off in February 2022 as rates went above 4.0%. Overall sales remain substantially above the level that prevailed prior to COVID. When COVID first hit in March, sales plummeted but soon spiked to record levels in the following months.
It is worth noting, Existing home prices reached record levels in June 2021.
The last time mortgage rates were 5.00% was November 2018 (red line below). As rates decreased the number of Existing homes sold increased (blue line) Mortgage rates went to multi-generation lows of under 3.00%, and both sales and prices accelerated. This one-time event where rates were under 3% was 17 weeks.
As rates started to rise in spring 2021, sales pulled back and home prices peaked in June 2021 and have leveled off. The black line represents the 12-month annual change, note how the upward slows. If prices continue to be flat, the black line will level off, thus leaving the impression that housing has slowed. This realization will occur in July/August 2022.
Existing home months of inventory have been steadily decreasing since 2011 with a consistent seasonal component of decreases in Dec/Jan. Months of inventory are at all-time lows. With such lows, one would anticipate higher home prices but sales have tapered off with higher interest rates.
Following the adverse impact of COVID in March 2020, Pending Home Sales Index has remained at record-high levels although in recent months is down due to a lack of homes for sale AND rising mortgage rates.
Home sales by region in the country have varied. In April 2021 the median home price in the Western region went over $500,000. Since that time period, prices have remained flat going on a year.
April 2022 data will be reported on May 19. The 12-month year-over-year price appreciation for the West will be near zero. The flatlining of prices will be attributed to the Mortgage rate increases starting in March 2022 even though the price slow down started months earlier in April 2021.