10/19/2023
For the fifth consecutive week, mortgage rates have risen, now at 7.57% due to the market and economic changes. The U.S. economy and incomes continue to grow at a steady pace, but the housing market has its challenges and affordability issues.
The average home value for Tampa Bay has dropped 1.4% since last year and the typical home value in Tampa Bay is currently $376,031, according to Zillow data. This amount exceeds the national average of $349,770. The part of Tampa Bay that experienced high appreciation during the pandemic is now seeing the steepest declines. Riverview, Florida is one example of a city that saw high increases in value during the pandemic but is now seeing a value drop of nearly 7%. Another analysis says that Polk and Hillsborough counties were two of the fastest-growing counties in the nation.
Nationally, available inventory of unsold homes rose by 1.8% the week of Monday, October 9, due to homebuyers halting their home searches waiting to see if mortgage rates would fall. But, that has not been the case in previous weeks. As of Monday, October 16, there are 546,000 single-family homes unsold on the market. That is a 1.7% increase compared to the week before, but 3.5% fewer than last year. Meanwhile, 38.2% of the homes currently on the market have taken a price reduction.
The National Association of Home Builders (NAHB) monthly confidence index fell 4 points to 40 in October. This is the third consecutive drop, which is the lowest rate since January. The rise in mortgage rates above 7% has triggered a reversal in homebuilder sentiment. “Builders have reported lower levels of buyer traffic, as some buyers, particularly younger ones, are priced out of the market because of higher interest rates,” said Alicia Huey, chair of the NAHB, “Higher rates are also increasing the cost and availability of builder development and construction loans, which harms supply and contributes to lower housing affordability”.
While mortgage rates have been decreasing homebuyer demand, some industry experts believe that rates will fall over the next year – predicting a drop to 6.1% by the end of 2024. Experts believe this to be true due to the forecasting of higher unemployment and slowed inflation that will in turn push rates down and demotivate the Fed from hiking interest rates. Currently, there are two Fed meetings left for 2023.
