Contact Us for a Free Consultation (347) 389-1682


Rising Interest Rates Mean Falling Home Sales

Posted by Melvin Monachan | Sep 12, 2022 | 0 Comments

After two years of home sellers enjoying prospective buyers lined up and eager to buy at nearly any price, home sales are finally cooling off.

The reason? Rising interest rates have made owning a home less affordable, pushing some buyers out of the marketplace altogether. And it's all happening rather quickly.

The Largest Rate Increase in 28 years

Since January, the interest rate on a 30-year-fixed mortgage has risen to almost 6 percent, from just above 3 percent at the beginning of the year. That means, for someone buying a $450,000 home, their monthly mortgage cost has risen about $700 solely due to interest. For many buyers, that kind of increase isn't manageable. For many more, home ownership isn't as tempting as it once was.

Federal interest rates rose three-quarters of a percent in June alone, the largest increase since 1994. Officials have also indicated that another increase is likely to come this summer. Each time the Federal Reserve raises interest rates, the rates for other big-ticket items like mortgages and auto loans go up, too. And each time the interest rates go up, the number of prospective buyers goes down – which is exactly the point.

Home prices are still at record levels, but sales are already beginning to decline in response to rising interest rates. From April to May of this year, sales of existing homes fell 3.4 percent, and builders are reporting a similar decrease in new home construction.

Drastic Steps to Slow Inflation

The Federal Reserve keeps raising rates to cool off what many have described as a too-hot economy, with inflation climbing faster than the marketplace can handle. The Fed's plan seems to be working, but that means the two-year golden period for home sellers to get unfathomable amounts for their homes has probably ended. That means buyers willing to pay significantly higher interest rates should have an easier time finding a home.

The housing market is changing fast, and no one is quite sure what will happen next. It's never been more important to have advice from someone like Attorney Melvin Monachan, who understands New York real estate law and who can advise you on how to protect your interests. Contact our office online or call us today at (347) 389-1682.

About the Author

Melvin Monachan

Melvin Monachan is the founder of The Law Office of Melvin Monachan, PLLC, a full service, real estate law firm representing individuals, investors and corporate entities in all aspects of real estate law. On the transactional side, Melvin represents purchasers and...


There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Our Commitment to Excellence

"We understand that a real estate transaction is typically one of the largest financial transactions of most peoples lives. That is why we take the time to properly guide you and keep you informed about the process every step of the way."