Good Monday Morning!

We are in the midst of a very unusual housing market, both locally and nationally. Yes, the market has slowed on all fronts and is most likely going to slow even further due to economic policies that are negatively affecting our national economy. Home sales are down considerably both here in the Eugene and Springfiled area and across the nation. The odd part of the current market is that home inventories are remaining very low. Why is this? It is being caused by an unusual situation where mortgage loan rates were historically low for many years and the majority of home owners took advantage of them and now have mortgages at 3% or lower on their existing home. These homeowners are very reluctant to sell their current homes with a low mortgage interest rate and take on a new home which would have a mortgage interest rate double or even higher than what they currently have. This is not the typical scenario. We would normally see home inventories increase significantly with a declining market. This would in turn bring about a much more competitive home market and send home prices downward. This situation is why, even with a slower housing market, sellers are still able to sell fairly quickly and at good prices, even in this market. This is why, if you are considering a home sale now, your homes value may be slightly less than it was earlier this year, but the market remains much better than it really should for sellers. Here is an article from "Realtor.com" that goes over our current national housing market.

The numbers: U.S. existing-home sales fell 1.5% to a seasonally adjusted annual rate of 4.71 million in September, the National Association of Realtors said Wednesday.

This is the eighth straight monthly decline, the first since 2007.

The decline was in line with economists forecasts, according to a Wall Street Journal survey.

The last time existing-home sales fell to this level was May 2020.

Outside of the pandemic, the level of sales activity was lowest since September 2012.

Compared with September 2021, home sales were down 23.8%.

Key details: Existing-home prices continue to moderate given the backdrop of higher rates and cautious buyers. The median price for an existing home fell to $384,800 in September from $389,500 in the prior month.

And expect this median price to keep falling through January and February, the NAR said.

The number of homes on the market fell 2.3% to 1.25 million units in September.

Expressed in terms of the months-supply metric, there was a 3.2-month supply of homes for sale in September, same as the previous month. Before the pandemic, a four or five-month supply was more the norm.

Homes remained on the market for 19 days on average, up from 16 days in September. Pre-pandemic, the average time for homes to remain on the market was a month.

Sales of existing homes mostly fell across the country. Aside from the West, where sales were unchanged from September, the rest of the regions saw declines.

But the West has seen large declines on a year-over-basis, compared to the rest of the country, of 31.3% from last September.

California may see a “sizable” price drop of as much as 10%, the NAR said.

All-cash transactions made up 22% of all transactions. About 29% of homes were sold to first-time home buyers, unchanged from the previous month a percent higher than last year.

Big picture: The mortgage rate hike continues to hit the real-estate market, with sales slipping. And we’re already seeing some price declines led by some regions.

Rates are firmly above 7%, and is expected to keep rising as the Federal Reserve attacks high inflation in the country.

That’s causing a surge in borrowing costs, which continue to hurt buyer demand. The average contract rate for a 30-year fixed-rate mortgage is at 6.94%, according to the Mortgage Bankers Association.

Someone who was taking out a $300,000 mortgage last year at 3%, now with higher rates, can only afford a $190,000 mortgage, NAR said—a 37% drop in what they can afford.

Equifax, a credit reporting company, said during its third quarter results that it expects mortgage originations to fall over 60% in the fourth quarter.

Economists believe that the housing market downturn is sending ominous signals to the rest of the economy:

What the realtors said: Lawrence Yun, chief economist at the National Association of Realtors said that existing-home sales have further to drop.

“We are not yet at the bottom,” as interest rates are still rising, Yun told reporters.

He said sales could fall to 4.5 million.

Yun added that housing inventory, however, fell from September, meaning that people weren’t selling homes as much, which is hindering prices from coming down further to more affordable levels.

“There will not be a housing market crash because of lack of inventory,” Yun said.

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