Interest rates continue to weigh on home purchases
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Rising mortgage rates continue to soften demand for homes in the Raleigh area and force homeowners to reduce prices.
Why it matters: With more homes on the market, Raleigh buyers could be getting additional negotiating room, according to data from Homes.com.
- Across the Triangle, more than half of listed homes in September reduced their initial asking prices, Stacey Anfindsen, a local appraiser, wrote in his monthly Triangle Area Residential Realty market report.
Yes, but: That doesn't mean there are buyers able to meet those lowered prices. An uptick in mortgage rates continues to reduce the purchasing power of buyers, Anfindsen added.
- The average monthly payment in September was $3,643, up from $1,390 in September 2020.
By the numbers: In September, the Raleigh market's median home price fell to $425,000, down 3.4% from a year earlier, according to the Homes.com report.
- That was the steepest decline among the 40 largest U.S. markets.
- Price drops were highest for townhomes, which fell 7.1% year over year.
- Overall, the number of home sales fell 2.4% in September, while the amount of homes on the market grew 4.4%.
Zoom in: Anfindsen's monthly report noted that the early signals from the market indicated demand was slowing.
- "The immediate measurable effects [of mortgage rates in early October] are fewer contracts, longer marketing times and greater use of price reductions," he said. Price reductions were up 15% in September compared to last year.
- "Higher borrowing costs increase monthly payments, reduce purchasing power and may delay purchase decisions," he added.
Between the lines: For those who can afford the monthly payments, however, there is far less competition in the market.
- Just 8% of sales in September had competing offers. In September 2023, 25% of sales did.
The big picture: The longer homes stay on the market, the more likely homeowners will be willing to budge on prices. But increasing borrowing costs are making those dropped prices still harder to afford.