AVERAGE PRICE OF NEW HOMES SOLD VS. AVERAGE 30 YEAR FIXED RATE MORTGAGE
FOR U.S. CREDIT UNIONS| DATA AS OF 06.30.23
© Callahan & Associates | CreditUnions.com
- Rising interest rates — and, consequently, costlier financing — have traditionally reduced housing demand and driven down home prices. However, home values paradoxically surged in parallel with record interest rates in the past few quarters.
- Although buyer demand has dropped in the face of high rates, many homeowners who locked in low rates during the pandemic have been uninterested in selling, which has dramatically reduced the number of homes for sale compared to years past. The difference in supply of homes versus demand was 8 million units, according to a May 2023 report from Freddie Mac.
- New home prices have started showing some signs of correction, with the average transaction value dropping 3.5% year-to-date to $500,600 as of June 30. That’s thanks in part to interest rates inching past 7.0% in the second quarter of 2023 — the highest in decades — and a bump in supply with 4 million new home constructions completed in the past year.
- Corresponding with the high rates and decreased demand, real estate originations among credit unions were down significantly at midyear in terms of numbers and dollars. Origination dollars alone were down -44.8% from last year.
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