Higher mortgage rates are likely to drive home sales back to a 13-year low as more buyers put their searches on hold—but they aren’t scaring everybody away.
Higher costs have stretched would-be buyers’ wallets: The median-priced home in the third quarter would cost the average worker 35% of his or her wages, according to an Attom Data affordability study released last month. That’s the greatest share since 2007, right before the housing bust. Recent rate increases should push down existing-home sales in the coming months. Economists expect that previously owned homes in September sold at a seasonally adjusted annual rate of 3.88 million, according to FactSet consensus estimates. Such a reading would be the lowest since October 2010, when the country was still climbing out of a financial crisis ignited by the housing market.
A record share of house hunters between June and August were looking to relocate, according to a Redfin evaluation of views to and from 100 metropolitan areas. Buyers relocating from a more expensive area often can pay cash, and avoid a mortgage altogether. “Cash is like a cheat code right now,” says Daryl Fairweather, Redfin ‘s chief economist. “You don’t have to deal with these high interest rates, and you don’t have to compete with all the people who do rely on mortgages to finance the purchase of their home.”
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