Existing home sales rose by 3.4% in October, marking the first year-over-year gain since 2021 according to the National Association of Realtors (NAR). To talk more about homebuying trends as mortgage rates remain elevated, Redfin head of economic research Chen Zhao and Kinloch Partners CEO Bruce McNeilage join Catalysts. Zhao explains how US homebuyers are now coming off the sidelines coming off the 2024 election and the Federal Reserve providing direction on its interest rate policy: “The number of people who are contacting Redfin agents for tours is up about 20% year over year right now, and it’s at the highest level that it’s been at since August of 2023.” McNeilage goes on to comment on the interplay between rates on the housing market and the bond market (^TYX, ^TNX, ^FVX). He explains where homebuyers are running into key affordability issues: “The average house in America in the top 50 cities is about $414,000. So it’s very tough to afford that when interest rates are going up. Now, if interest rates come down, you think you might be able to afford that $414,000. But the builders raised the price. And last year, the builders have raised the price on average 3%. You also have to look at taxes and insurance… [which] are not going down.”
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