Mortgage interest rates hit their highest level in more than a decade, leading experts to see signs of a slowdown, according to a new report. But that didn’t stop Orlando’s median home price from setting its third straight monthly record in April.
The median in the Orlando metro area jumped to $370,000, up $75,000 year-over-year, according to the market report released Monday by the Orlando Regional Realtor Association. Homes spent an average of 24 days on the market, compared to 27 in March.
But a limiting factor was that interest rates on a 30-year fixed loan averaged 4.9%, a 66% jump from a year earlier and their highest rate since 2009, according to the lender. Freddie Mac Mortgage. On Sunday, the national rate had climbed to 5.57%, according to Bankrate.com.
“As interest rates rise, it will be more difficult for some buyers because their monthly housing payments will also be higher,” ORRA President Tansey Soderstrom said in a statement. The association analyzes home sales in Orange, Lake, Osceola and Seminole counties in its report.
Realtor Cheryl Zackery of Experience Orlando Realty said she noticed a drop in home purchases last month.
“I think the market has slowed down,” she said. “Not just because of interest rates, and not because we don’t have buyer activity, but because of the challenges buyers face getting an offer accepted.”
Sales fell from 4,100 in March to 3,800 in April. Inventories were still near record lows but still rose 7.7%, although new listings were down slightly.
Zackery said interest rates are definitely pushing some homebuyers, especially low-income buyers and first-time buyers, out of the market as they weigh on buying power.
For a mortgage of $370,000 with a down payment of 20% at 4.9%, the average monthly payment would be $1,571. Compare that to last April, when the median home price was $295,000 and the average interest was 2.98%. With 20% deposit, the average payout was $992.
Between high prices and rising interest rates, “there are definitely people who have completely given up because of both,” Zackery said.
Another issue for Zackery buyers has been that sellers require buyers to cover a valuation spread, the amount between what a home is appraised and what the seller is asking for, which usually cannot be covered by a funding.
“Everyone needs a down payment and closing costs,” Zackery said. “Now they need another $10,000, $20,000 just to deal with the valuation gap.”
The Federal Reserve has signaled it will raise rates again this year, but for many buyers Zackery works with, the warm market is cold to them.
“It’s already slowed down for a certain sect of people,” she said. “In Orlando…labour, these people can’t buy a house.”