Rising Mortgage Rates Amplify the Housing Squeeze

Monthly payments for financed home purchases increased as mortgage rates rose from 5.98% to 6.37% last week. This shift kept potential buyers on the sidelines, causing existing home sales to fall 3.6% in March to a seasonally adjusted annual rate of 3.98 million units. Sales are 1% lower than a year ago. This decline in sales volume reflects a broader affordability crisis for those requiring financing. First-time buyers accounted for 32% of transactions in March, down from 34% in February. All-cash sales, which insulate buyers from the market's borrowing costs, fell to 27% of deals from 31% in February. The sales decline occurred despite a steady demand for the available same inventory. Housing inventory remains constrained at 1.4 million unsold homes, or a 4.1-month supply. A balanced market typically requires a 4.5 to 6-month supply. Because supply remains below historical norms, the median existing-home price rose 1.4% year-over-year to $408,800. First-time buyers' share of transactions decreased from 34% in February.