By Morgan Reed | M•I•A MEDIA GROUP
The U.S. housing market gave buyers more homes to choose from in October, but higher mortgage payments kept many from closing a deal. Sales of existing homes fell 5.5% from September and 8.8% from a year earlier, the National Association of Realtors reported Nov. 12. The seasonally adjusted annual pace of 3.75 million sales was the slowest since August 2010. The national median sale price still edged up 0.4% from a year earlier to $416,700.
The benchmark 30-year fixed mortgage averaged 7.33% in October, up from 6.86% in September and 6.25% a year earlier. Rates have since eased for four consecutive weeks, reaching 7.11% on Nov. 12, according to Freddie Mac. For buyers who stepped away when rates climbed, that decline offers some breathing room. Borrowing is still considerably more expensive than it was last fall.
The same home can cost $250 more a month
On a $350,000, 30-year fixed mortgage, principal and interest would cost about $2,155 a month at 6.25%. At 7.33%, the payment rises to about $2,407. That’s an extra $252 a month, or roughly $3,000 a year, on the same loan. Property taxes, homeowners insurance and any association dues would come on top of that.
That difference helps explain why a market with more listings can still record fewer sales. First-time buyers accounted for 29% of October transactions, down from 32% a year earlier. A household buying its first home typically has to assemble a down payment from savings or other sources without proceeds from a previous home sale. A higher rate can force that household to shop at a lower price, save longer or renew its lease.
More listings give some buyers room to negotiate
About 1.59 million existing homes were on the market at the end of October, up 4.6% from a year earlier. At October’s sales pace, that was a 5.1-month supply, the largest since November 2015. Homes spent a median of 35 days on the market, up from 33 in September. Buyers who can afford today’s rates may have more room to ask for a lower price or help with closing costs, especially when a listing has been sitting for weeks.
South Florida buyers face higher starting prices
The national slowdown comes against a backdrop of higher prices in South Florida. In the third quarter, the median single-family sale price was $685,000 in Miami-Dade County and $645,000 in Broward County, with both figures up from a year earlier. In Palm Beach County, the September median reached $656,000, up 6.7% year over year, even as single-family closings fell 2.7%. That combination illustrates how sales can slow while the price of a typical purchase continues to rise.
For South Florida households, the cost of getting the keys depends on more than the price a seller accepts. A buyer may secure a concession and still face a monthly bill that stretches the budget once insurance, taxes and any association dues are included. The next test for the housing market is whether borrowing costs ease enough to bring back buyers who found homes they liked this fall but couldn’t make the monthly payment work.
