Mortgage rates continued to surge for the seventh straight week. According to Freddie Mac, the 30-year fixed mortgage rate rose to 5.11% from 5% the previous week. As a result, home buyers need to earn about $25,000 extra if they want to buy the typical home now compared to a year earlier.
While people need to spend more of their budget on housing to buy a home, it seems the housing market has started to cool. Existing home sales dropped by 3% in March compared to February as mortgage rates rose nearly one percentage point.
This headline figure is the seasonally-adjusted figure that is reported in the news. However, this was not the actual number of sales but the number of sales after adjusting for seasonality. According to the raw count of sales (not seasonally adjusted), existing-home sales improved compared to February by 30 percentage points. Then, compared with the historical average, existing-home sales also outperformed. Nearly 460,000 homes were sold in March while about 420,000 homes are typically sold during this month. Thus, home sales were higher than the historical average by about 8 percentage points. Nevertheless, home sales were 16% and 11% above the historical average level in January and February, respectively. This indicates that the market has lost steam due to higher mortgage rates.