U.S. mortgage rates hit a new high in the outbreak of the epidemic In December, complete home sales fell sharply month-on-month

U.S. home mortgage rates climbed for the fourth consecutive week, hitting another high since the early days of the COVID-19 outbreak in 2020. Total U.S. existing home sales plunged 4.6 percent annualized month-on-month in December, the worst December of sales since 2009.

In the week to Thursday, the U.S. 30-year mortgage rate rose 11 basis points to 3.56 percent, the highest level since March 19, 2020, and 2.77 percent for the same period in 2021, According to Freddie Mac. The 15-year home mortgage rate rose 17 basis points to 2.79 percent, the highest since April 23, 2020, and 2.21 percent in the same period last year.

Inflation in the U.S. is high, and the market expects the Fed to raise rates three or four times this year, which pushes up the interest rate on home mortgages, which are closely linked to U.S. 10-year Treasuries. This week, the 10-year Treasury yield rose above the important 1.90% mark, hitting a two-year high and rising about 40 basis points from 1.51% at the end of 2021.

The sales figures for existing homes released on the same day on Thursday were poor. According to the National Association of Realtors (NAR), the total number of existing home sales in the United States in December was 6.18 million, with an expected 6.43 million, and the value in November was revised from 6.46 million to 6.48 million. Total U.S. existing home sales fell 4.6% month-on-month in December, down 0.5% expected and up 1.9% month-on-month in November. Existing home sales fell 7% year-on-year in December.

However, while total existing home sales fell in December, overall sales in 2021 remained the best since 2006.

The median price of existing home sales in December rose 15.8% from the same period in 2020 to $358,000. In November it was $354,400.

Insufficient inventory remains the biggest problem in the real estate market. There were only 910,000 completed homes for sale in December, down 18 percent from November and down 14.2 percent from 2020. At the current rate of sale, the supply can be maintained for about 1.8 months. Realtors see any supply of less than five months as a sign of tight markets.

In line with previous trends, the more high-end homes there are, the stronger sales. In December, home sales below $250,000 fell, while property sales for at least $500,000 were still increasing.

By region, sales fell in all regions in December, with the decline being most pronounced in the west and south.

Existing home sales account for about 90 percent of U.S. home sales, and related sales are calculated at the time of home closing. The remaining 10% is about 10% of new home sales, which are calculated when the house sale and purchase contract is first signed.

Freddie Mac Chief Economist Sam Khater said in a statement: "Demand for home purchases fell slightly ahead of the spring home buying season due to rising mortgage rates. Still, supply is close to the tightest in history, keeping house prices high. ”

Lawrence Yun, chief economist at NAR, said, "Even if existing home sales are down, the fact that prices are strong suggests that buyers are there." Insufficient inventory is hampering some sales activities. ”

Financial blog Zerohedge commented that concerns about the Omicron epidemic, soaring mortgage rates and sluggish sentiment among homebuilders sent off a sharp drop in existing home sales in December.

Overall, higher borrowing costs, combined with record house prices, will affect the purchasing power of home buyers, squeeze demand in the real estate market, and ultimately cool down the US property market.

This article is from Wall Street Insights, welcome to download the APP to see more