Homebuyers get a break: Hot real estate market finally cooling amid rising interest rates

Potential real estate buyers may finally get some hope and relief as home sales fell in the last month by nearly 10% amid a real estate market that is finally beginning to slow down.

Sales “declined 8.6% from May as escalating mortgage rates and housing prices impacted potential buyers,” according to a Wednesday National Association of Realtors press release. "

“Contract signings to buy a home will keep tumbling down as long as mortgage rates keep climbing, as has happened this year to date,” NAR Chief Economist Lawrence Yun said in the release. “There are indications that mortgage rates may be topping or very close to a cyclical high in July. If so, pending contracts should also begin to stabilize.”

The change comes as the Federal Reserve continues to raise interest rates as part of an attempt by the Biden administration to curtail rising inflation.

The real estate market spiked significantly in the last two years during the COVID-19 pandemic as many city residents moved out to suburban neighborhoods and some even retreated from states with staunch restrictions such as California and New York.

According to a January 25, 2022 report from move.org, the top three states residents fled from were California, Texas and New York. Of those surveyed, 20% of those who moved relocated to another state.

The NAR said its data indicates that “buying a home in June [2022] was about 80% more expensive than in June 2019.”

The index predicted that home sales would continue to diminish throughout the year.

“Home sales will be down by 13% in 2022, according to our latest projection," Yun added. "With mortgage rates expected to stabilize near 6% and steady job creation, home sales should start to rise by early 2023.”