Since the beginning of this year, US home sales have continued to fall. The rise in interest rates caused by high housing prices and interest rate hikes is the main reason for prospective homebuyers to give up buying houses. The decline in the property market indicates that the US economy will be weak. More and more interested buyers are abandoning the sublet, and the US property market has been transferred to the buyer’s market.
The US property market and the stock market are close to historical highs, and investors are inevitably worried about the asset price bubble or will burst.
High housing prices and rising mortgage interest rates have stunned US homebuyers. Although the US job market and GDP have not yet revealed signs, there are more and more people who have abandoned subletting in the US real estate market. The situation of a weaker property market has already appeared.
Since the beginning of this year, the trend of the US property market has changed significantly. According to a survey conducted by the National Association of Realtors in the United States, the purchase of second-hand homes in the United States fell by 4.1% from the previous year and has fallen for seven consecutive months. After entering September, the number of customers who actively look at the house is increasingly scarce, and people’s willingness to purchase is becoming increasingly low. After the US house price bottomed out in 2012, it has risen by 50% so far. The 30-year US residential mortgage rate has grown rapidly by 1 percentage point this year and has now broken 5%, a record high in eight years. According to comprehensive calculations, the average monthly price of American home buyers has increased by 16% compared with the beginning of the year, so many prospective buyers have shouted “can’t afford”.
The US Realtors Association recently released data showing that the total number of existing home sales in the United States increased by 5.15 million in September, a record low since November 2015. The market expects 5.29 million households. In August, it was revised down from 5.34 million to 5.33 million. It refreshed the lowest level since February 2016 created in July. At this point, home sales have been falling for six months, and in July it has hit the longest consecutive month of decline in five years.
Industry experts believe that the decline in home sales is related to the rebound in interest rates. According to data released by the American Mortgage Bankers Association on October 8th, the average mortgage rate for 30 years rose to 5.1%, the highest since February 2011. The US Federal Housing Administration (FHA), which is commonly used by first-home buyers and borrowers, guarantees that the average interest rate on 30-year FHA loans rose to 4.5%, the highest since February 2011. The residential survey agency Attom Data Solutions released a US residential affordability index of 92 in the third quarter, down from 95 in the second quarter and 102 in the same period last year, and a 10-year low since the third quarter of 2008.
Since the end of last year, a number of Wall Street institutions, including Goldman Sachs, have said that the US property market and the stock market are close to historical highs, and investors are inevitably worried about asset price bubbles or will burst. Since Fed Chairman Powell took office in February this year, he has repeatedly stressed that some assets, including stocks, are overpriced, suggesting that interest rates will continue to rise in the future. The Fed’s interest rate hike in December is a high probability event. It may raise interest rates three times in 2019. The European Central Bank will also withdraw from quantitative easing by the end of 2018. In the summer of 2019, interest rates will be further tightened, and asset prices will face adjustment pressure.
Most American home buyers value the appreciation potential of the house. The rapid rise in house prices overdrafts the increase in the next few years. Buyers are increasingly picking up the house, causing many property markets to enter the buyer’s market. The decline of the property market indicates that the related industries such as furniture and decoration are about to enter a recession. The analysis believes that the trend of the US real estate market means that the US economy will be weakening. In addition, US home sales may continue to decline as high house prices and high interest rates will limit the spending power of some homebuyers. In the medium and long term, the pressure on the Fed to raise interest rates will be released in the fourth quarter of 2019, which will increase the loan interest rate and the cost of buying houses. At that time, the new housing and housing sales data will face the top consolidation.
According to a survey by the Federal Home Loan Mortgage Corporation, more than three-quarters of Americans now believe that renting a home is more cost-effective than buying a home. Demand for homes for sale may remain weak in the coming months, with about 58% of renters saying there are no plans to buy homes, up from 54% in the February survey.
Since the beginning of this year, Trump Tower, the “Crown Pearl” in Trump’s real estate project, has sold only 2 sets, which is significantly lower than the 7 sets of last year and the 8 sets of the previous year. The data shows that the price of Trump Tower also suffered a diving this year, this year’s unit transaction price of the president of the election of Bitamp in 2016 fell by 30%.