If you want to buy a home, congratulations! Home prices are falling even more. According to the S&P Case-Shiller Home Price Index, home prices decelerated at their fastest pace on record. Home prices fell 0.9% in August and were up 13% in August from last year, easing down from a 15.6% gain in July. So while home prices are still elevated compared to last year, we thankfully aren't seeing the same kind of growth as before.
It's no surprise why: Combined with higher housing prices, average mortgage rates right now are sitting close to 7% on a 30-year fixed-rate loan according to Freddie Mac. That means that, if you buy a home right now, you'll see your wallet hit with a double whammy: once when you purchase the home at a higher price, and again throughout the life of the loan as you pay more interest. And how badly are you being hit? Depending on the price of the house, it could be to the tune of a few hundred thousand dollars. So, is it any wonder buyers are saying: "Forget it?"
But with the heat of the housing market starting to cool, some buyers may be ready to get off the sidelines. And with concerns of a recession looming, the power is starting to shift into the hands of the buyer.
Crumbling Consumer Confidence
As the risk of recession grows with each rate hike from the Federal Reserve, consumer confidence is dropping, the Conference Board's latest Consumer Confidence Index shows. After two months of consumers becoming more confident, the index dropped in October. Consumer expectations of the economy going forward also dropped, to a reading of 78.1 from 79.5. Any reading under 80 signals that recessionary risks are rising.
- Kristin
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