US consumers see the worst home buying conditions in generations as mortgage rates rise sharply in response to an aggressive tightening cycle by the Federal Reserve.
About 4 in 5 consumers now rate home buying conditions as bad, a record high for data dating back to 1978, based on the University of Michigan Consumer Sentiment Survey in November. The number of people that attribute erosion under conditions to higher rates of interest is at its highest in 40 years, data showed on Friday.
The housing market, which is especially vulnerable to higher borrowing costs, has began to collapse because the Fed began raising rates of interest to curb demand across the economy and curb rampant inflation. Mortgage rates hover around the very best levels in twenty years, and last week it was above 7%.
Within the Seattle area, homes linger longer available in the market as higher rates reduce the ability of buyers. King County saw 38% fewer single-family homes waiting on the market in October than last 12 months, and 34% lower than at the identical time in 2019 before the pandemic topped the market, based on the Northwest Multiple Listing Service.
In line with MLS data, Snohomish had 3 times more homes on the market at the top of October than at the identical time last 12 months.
A separate measure from the university showed home buying conditions tied to housing prices fell in November. While it has improved somewhat because the starting of this 12 months, it stays deeply negative and well below its mid-2020 peak.
Higher rates are a burden not only on the housing market. Conditions for purchasing durable goods for households have worsened this month after a spike in October, and the proportion of consumers who say purchasing conditions for motorcars is bad on account of rising borrowing costs rose to their highest level since 1982.
The University of Michigan’s primary consumer sentiment indicator fell to its lowest level in 4 months in early November, while inflation expectations rose.
This report includes information from employees of the Seattle Times.