B4 • Friday, May 20, 2022
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RATES SURGE, HOME SALES TUMBLE Alex Veiga ASSOCIATED PRESS Sales of previously occupied U.S. homes slowed for the third consecutive month in April as mortgage rates surged, driving up borrowing costs for would-be buyers as home prices soared to new highs. Existing home sales fell 2.4% last month from March to a seasonally adjusted annual rate of 5.61 million, the National Association of Realtors said Thursday. That was slightly higher than what economists were expecting, according to FactSet. Sales fell 5.9% from April last year. After climbing to a 6.49 million annual rate in January, sales have fallen to the slowest pace since June 2020, near the start of the pandemic, when they were running at an annualized rate of 4.77 million homes. The median home price in April jumped 14.8% from a year ago at this time to $391,200. That’s an all-time high according to data going back to 1999, NAR said. “Without a doubt, rising mortgage rates, rising prices are hurting affordability, but we should not discount that we’re still lacking inventory,” said Lawrence Yun, NAR’s chief economist. Fierce competition for limited properties on the market and ultra-low mortgage
WILFREDO LEE / ASSOCIATED PRESS FILE
A home with a “Sold” sign is shown, Sunday, May 2, 2021, in Surfside, Fla. rates superheated the housing market the last couple of years, but now its cooling as homebuyers face sharply higher home financing costs than a year ago following a rapid rise in mortgage rates. In April, the weekly average rate on a 30-year fixedrate home loan climbed above 5% for the first time in more than a decade, crimping would-be homeowners’ purchasing power at the out-
Average long-term U.S. mortgage rates edge down to 5.25% ASSOCIATED PRESS WASHINGTON — Average longterm U.S. mortgage rates retreated modestly this week, but interest on the key 30-year loan remains at decade-high levels. Mortgage buyer Freddie Mac reported Thursday that the 30-year rate slipped to 5.25% from 5.3% last week. By contrast, the average rate stood at 3% a year ago. Earlier this month, the Federal Reserve intensified its fight against the worst inflation in 40 years by raising its benchmark interest rate by a half-percentage point and signaling more big rate hikes to come. The Fed’s move, its most aggressive since 2000, will mean higher costs for mortgages as well as credit cards, auto loans and other borrowing for individuals and businesses. Last week, the government reported that U.S. producer prices soared 11% in April from a year earlier, a hefty gain that indicates high inflation for consumers and businesses will linger in the months ahead. In a separate report last week, government data showed that consumer prices jumped 8.3% last month from a year ago, just below the 8.5% yearover-year surge in March, which was the highest since 1981. Homeownership has become an increasingly difficult aspiration recently, especially for first-time buyers. Besides staggering inflation, rising mortgage rates and higher home prices, the supply of homes for sale continues to be scarce. Sales of previously occupied U.S. homes slowed for the third consecutive month in April as mortgage rates surged.
set of the spring homebuying season, traditionally the busiest period for home sales. Mortgage buyer Freddie Mac reported Thursday that the 30-year rate slipped to 5.25% this week from 5.3% last week. A year ago, the average rate stood at 3%. Mortgage rates are climbing following a sharp move up in 10-year Treasury yields, reflecting expectations of higher interest rates
overall as the Federal Reserve hikes short-term rates in order to combat the worst inflation in 40 years. With inflation at a four-decade high, rising mortgage rates, elevated home prices and tight supply of homes for sale, homeownership has become less attainable, especially for first-time buyers. Higher rates can limit the pool of buyers and cool the rate of home price growth —
good news for buyers. But higher rates can also limit affordability. For now, the housing market continues to favor sellers as buyers vie for a still tight inventory of homes for sale, which has kept pushing up home prices. Even as sales slowed last month, it was common for homes on the market to receive multiple offers. Inventory levels have to
go higher before multiple offers dissipate from the market, Yun said. Until then, prices are likely to move higher. On average, homes sold in just 17 days of hitting the market last month, unchanged from March or April last year. In a market that’s more evenly balanced between buyers and sellers, homes typically remain on the market 45 days. As is typical in the spring, the number of homes on the market increased in April from the previous month. Some 1.03 million properties were available for sale by the end of April, up 10.8% from March, but down 10.4% from April last year. At the current sales pace, the level of for-sale properties amounts to a 2.2-month supply, the NAR said. That’s up from 1.9 months in March, and down from 2.3 months a year ago. Real estate investors and other buyers able to buy a home with just cash, sidestepping the need to rely on financing, accounted for 26% of all sales last month, down from 28% in March, NAR said. Homes purchased by investors made up 17% of sales in April, down from 18% the previous month, while firsttime buyers accounted for 28% of transactions, down from 30% in March and 31% a year ago.