As of Sept. 23, the national average for a 30 year fixed mortgage is 6.43%, stalling the housing market across the country.
The standard home value in the US is $356,026, up 16.5% over the past year, although home values fell by 0.3% from July, the largest monthly decrease since 2011, per Zillow Group Z.
What Happened: Approximately 64,000 home-purchase agreements fell through in August, which is the same as 15.2% of homes that went under contract for the month, according to RedFin.
The percentage of home-purchase agreements that fell through has gone up by 15% over the past three months, and before the epidemic, this percentage had maintained at 12%.
Home values have fallen since April, but they are still up 43.6% since August 2019, according to Zillow.
The Fed's interest rate policy is also adding to higher mortgage payments as the monthly mortgage is now $1,643 from $897 at the end of August 2019, up 83% from before the epidemic.
The Sun Belt cities that were rising in popularity during the pandemic, including Jacksonville, Las Vegas and Atlanta, are the most impacted by rising rates.
In Jacksonville, 26.1% of homes under contract fell through in August, the highest percentage among 50 of the most populous U.S. cities.
Why It Matters: Federal Reserve Chair Jerome Powell said on Sept. 21 that the housing market has been running hot and that there needs to be a reset as home values have reached record levels.
Some homebuyers are finding that rates could be much higher than they were when they toured the home and got pre-approved for their mortgage rates by the time they go under contract and lock in their mortgage rates. Sam Chute, a Redfin RDFN real estate agent who works with sellers in Miami, said that the deal can be killed because the buyer is no longer financially comfortable with it.
The rental market has been up 12.3% year-over-year as the average monthly rent is $2,090, with more buyers backing out of the market due to sky-high home values.
Since the Pandemic, the Sun Belt has seen the highest growth in home-buyers. Inevitably, home values have gone up, leaving those unwilling to lock in a mortgage to rent.
NASB Financial Inc., a mortgage lender, is offering a wide variety of banking products, including checking, savings and certificate of deposit accounts, for prospective buyers who are looking to purchase their dream home. Self-employed mortgage options are also available, including self-employed mortgage options for the handyman or self-incorporated day trader.