U.S. housing market cooling off

After historically low-interest rates during the COVID-19 pandemic, the housing market is finally showing signs of stabilization.

"There’s probably I would say about a 50-percent reduction in overall mortgage production since it’s peak but the purchase market and real estate market in New York is still strong," said Neal Krumper, Sr. VP of Sales of LendGen Mortgage.

The team at LendGen Mortgage says with rates up and refinancing down - home sales have been accounting for 80-percent of the business.

But higher interest rates are limiting potential buyers - and driving people to look at alternative financing options like adjustable rate mortgages with lower starting rates.

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"Purchases are still coming in, realtors are still out there, they’re selling homes," said Riki McBride, VP of Operations with LendGen Mortgage. "They need financing. One of the struggles is qualifying with the rates where they are right now."

According to the latest data from OneKey MLS, there were 22-percent fewer closed sales in Suffolk County last month compared to the same time last year -  and in Nassau, there was close to a 24-percent decline over the same time but prices overall haven’t been affected.

Market analyst Jonathan Miller, president and CEO of Miller Samuel Real Estate Appraisers says higher mortgage rates are slowing down the housing market.

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"The for sale market is slowing bc of rising rates and the rental is seeing records," he said.

And while there are still bidding wars - they’re much less common.

"In the second quarter of this year, we saw bidding wars comprises about fifty percent, 1 in 2 above asking price," Miller said. "That’s not happening now. It’s a much more modestly moving market."

As for the future, experts expect a normalized housing market unless we see a recession - in that case they predict housing prices would eventually come down.