Housing Economist Warns of 8% Mortgage Rates After Home Sales Disappoint

Lawrence Yun, chief economist of the National Association of Realtors (NAR), warned on Thursday that mortgage rates could reach 8% in the coming months after home sales fell for the seventh consecutive month in August.

Yun's warning came after the NAR reported that home sales fell by 2.3% in August from July and by 7.7% from a year ago. This is the longest streak of declining home sales since the Great Recession.

Housing Economist Warns of 8% Mortgage Rates After Home Sales Disappoint

The decline in home sales is due to a number of factors, including rising mortgage rates, high inflation, and a shortage of homes for sale. Mortgage rates have doubled in the past year, making it more expensive for buyers to purchase a home. Inflation is also at a 40-year high, which is squeezing household budgets and making it more difficult for buyers to afford a down payment.

The shortage of homes for sale is also contributing to the decline in sales. The inventory of homes for sale is at a near-record low, which is driving up prices and making it more difficult for buyers to find homes that meet their needs.

Yun said that the housing market is facing a number of challenges, but he remains optimistic about the long-term outlook. He expects that the housing market will stabilize in the coming months and that home sales will start to pick up in 2024.

What does this mean for home buyers and sellers?

For home buyers, Yun's warning means that it is important to be prepared for higher mortgage rates. Buyers should also be prepared to act quickly, as the inventory of homes for sale is low.

For home sellers, Yun's warning means that it is important to price their homes competitively. Sellers should also make sure that their homes are in good condition and that they are staged to appeal to buyers.

What can the government do to help the housing market?

The government can take a number of steps to help the housing market, including:

• Providing financial assistance to home buyers: The government can provide financial assistance to home buyers, such as down payment assistance grants and tax credits. This would make it easier for buyers to purchase a home.

• Easing credit standards: The government can ease credit standards, which would make it easier for people to qualify for a mortgage. This would increase demand for homes.

• Investing in infrastructure: The government can invest in infrastructure, such as roads and bridges. This would create jobs and boost economic growth, which would lead to increased demand for homes.

Conclusion

Housing economist Lawrence Yun has warned that mortgage rates could reach 8% in the coming months after home sales fell for the seventh consecutive month in August. This is due to a number of factors, including rising mortgage rates, high inflation, and a shortage of homes for sale.

Both home buyers and sellers should be aware of the challenges facing the housing market. Buyers should be prepared for higher mortgage rates and to act quickly. Sellers should price their homes competitively and make sure that their homes are in good condition.

The government can take a number of steps to help the housing market, such as providing financial assistance to home buyers, easing credit standards, and investing in infrastructure.