US real estate: New home sales plummet

According to the latest figures from the US Commerce Department, 603,000 new homes were sold in September compared to 677,000 in August.

This new decline in transactions is a new sign of the downturn in the real estate market, which is suffering from the rise in interest rates for mortgage loans following the tightening of monetary policy by the American Federal Reserve (Fed) in an effort to combat inflation.

In September, however, the decline in sales of new homes was a little less significant than expected by analysts who were betting on 550,000 sales because interest rates on 30-year mortgages had temporarily eased at the end of July and the beginning of august. This encouraged future buyers to borrow quickly.

Loan applications fall

However, 30-year mortgage rates – the most common loan in the United States – resumed their ascent in early September and reached 7.16% last week, a high since 2001, according to statistics from the Mortgage Bankers Associations published on Tuesday evening. .

Applications for home loans fell by 1.7% last week, for a sixth consecutive weekly decline.

The further erosion of homebuying affordability will put further pressure on real estate activity over the coming”, estimated Nancy Vanden Houten, of Oxford Economics, commenting on these figures.

The Case-Shiller index, widely followed to assess prices in the real estate market, but published with a month’s delay, revealed on Tuesday that in August, the rise in prices had slowed drastically over a year whereas they generally increase always from one year to the next.

They only increased nationally by 13% over one year in August against +15.6% in July.

This is the strongest deceleration in the history of the indithis,” warned Art Hogan, an analyst for B. Riley Wealth Management.

A price drop not seen since March 2009

Over one month, housing prices in the 20 largest American cities even fell by 1.3%, unheard of since March 2009.

We are beginning to see the effect of rising interest rates on house prices. This is the function of Fed policy and not collateral damage.noted Art Hogan again.

The central bank is indeed seeking to reduce consumption, and therefore the purchasing power of Americans, in order to tame inflation. However, it is in the real estate heritage that resides the first wealth of the Americans, who own their homes at some 65%.

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