Some 54,300 previously occupied U.S. homes were purchased by non-U.S. citizens in the 12 months ended in March, according to a report this week by the National Association of Realtors.

That’s the fewest homes sold to foreign nationals in data going back to 2009. Sales were down about 36% compared to the same period a year earlier.

Those transactions from April 2023 through March of this year totaled $42 billion, a 21.2% decline from the prior-year period, NAR said.

“International buyers face the same difficult market challenges as domestic buyers — lack of inventory, higher mortgage rates, the affordability condition,” said Lawrence Yun, NAR’s chief economist. “On top of that, for many international buyers the stronger dollar was not in their favor.”

The U.S. housing market has been stuck in a slump since 2022, when mortgage rates began to climb from pandemic-era lows. Existing home sales sank to a nearly 30-year low last year as the average rate on a 30-year mortgage surged to a 23-year high of 7.79%, according to mortgage buyer Freddie Mac.

The average rate has mostly hovered around 7%, limiting home shoppers’ purchasing power. At the same time, the supply of homes for sale, though rising in recent months, remains close to historic lows. That’s kept the market competitive enough to lift home prices to new highs.

On top of those affordability challenges, foreign buyers have to factor in the potential for additional costs when the U.S. dollar is stronger than their currency. The U.S. Dollar Index, which tracks the value of the greenback relative to a basket of foreign currencies, has risen 3.9% over the past 12 months.

“The strong U.S. dollar makes international travel cheaper for Americans but makes U.S. homes much more expensive for foreigners,” said Yun. “Therefore, it’s not surprising to see a pullback in U.S. home sales from foreign buyers.”

All-cash sales accounted for half the international buyer transactions, compared to just 28% of all existing-home buyers, NAR said.

The report defined international buyers as non-U.S. citizens with permanent residences outside the country and immigrants who had been in the U.S. less than two years when they bought a home. It also included purchases by non-immigrants living in the U.S. for more than six months under professional or educational visas, among others.

The number of existing U.S. homes purchased by international buyers peaked in the 12 months ended March 2017 at 284,500 properties, according to NAR. That was fueled in part by a surge in Chinese nationals snapping up homes.

Among the foreign nationals who bought a U.S. home in the 12 months ended in March of this year, buyers from China accounted for 11% of purchases, matching Mexico, NAR said. Home shoppers from Canada topped the list with 13%.

Where did most of the international home shoppers end up buying a home? Florida drew the most at 20% of all sales to foreign buyers, followed by Texas (13%), California (11%) and Arizona (5%). Georgia, New Jersey, New York and North Carolina each accounted for 4%, NAR said.

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The National Association of Realtors said Friday that existing U.S. home sales totaled 5.03 million last year, a 17.8% decline from 2021. That is the weakest year for home sales since 2014 and the biggest annual decline since 2008, during the housing crisis of the late 2000s.

The median national home price for all of last year jumped 10.2% to $386,300, the NAR said, and it’s up 42% from 2019, before ultra-low mortgage rates and pandemic-fueled demand sent the market into a frenzy. That translates to a median $114,000 increase in housing wealth in three years.

“So, homeowners have done well during this housing (market) from 2019 through Covid until now,” said Lawrence Yun, the NAR’s chief economist. “The one big negative for home sales is home prices, which have risen dramatically, much faster than peoples’ income.”

Mortgage rates more than doubled in 2022, climbing to a two-decade high of 7.08% in the fall as the Federal Reserve continued to boost its key lending rate in a quest to cool the economy and tame inflation. Home sales slowed from a torrid pace at the start of the year as the surge in borrowing costs limited home hunters’ buying power.

As rates rise, they can add hundreds of dollars to monthly mortgage payments. That can discourage homeowners who locked in a far lower rate the last couple of years from buying a new home, and price out many would-be buyers. In 2022, first-time buyers accounted for only 26% of all home sales, the NAR said.

The average rate on a 30-year mortgage rate fell this week to 6.15%, its lowest level since September, according to mortgage buyer Freddie Mac. Still, it remains nearly double the 3.56% average rate a year ago.

Mortgage rates are likely to remain a significant hurdle with the Federal Reserve consistently signaling its intent to keep raising short-term rates. While inflation has begun to slow, some Fed officials maintain that the central bank needs to keep hiking rates to make sure its job is done.

While mortgage rates don’t necessarily mirror the Fed’s rate increases, they tend to track the yield on the 10-year Treasury note. The yield is influenced by a variety of factors, including expectations for future inflation and global demand for U.S. Treasurys.

Existing home sales fell in December for the 11th month in a row to a seasonally adjusted annual rate of 4.02 million, the NAR said. That’s slightly better than what economists were expecting, according to FactSet.

December’s sales sank 34% from a year earlier. Excluding the steep slowdown in sales that occurred in May 2020 near the start of the pandemic, sales last month skidded to the slowest annual pace since November 2010.

“Mortgage rates have fallen in the recent past weeks, so I’m very hopeful that the worst in home sales (is) probably coming to an end,” Yun said. “Maybe this latest monthly figure will be the cyclical low point.”

Despite the slowdown, home prices continued to rise last month, albeit at a slower pace than earlier in the year. The national median home sales price rose 2.3% in December from a year earlier to $366,900, the NAR said.

Even if prices do stabilize, there are a stubbornly low number of homes on the market. The inventory of homes for sale fell for the fifth consecutive month in December, to 970,000 homes. That’s down 13.4% from the previous month, but up 10.2% from December 2021, and amounts to a 2.9-month supply at the current sales pace, the NAR said. In a more balanced market between buyers and sellers, there is a 5- to 6-month supply.

Homebuyers should have more to choose from in the spring when inventory traditionally picks up.

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2022 was slowest year for US home sales in nearly a decade

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Mortgage buyer Freddie Mac reported Thursday that the average on the key 30-year rate jumped to 7.08% from 6.94% last week. The last time the average rate was above 7% was April 2002, a time when the U.S. was still reeling from the Sept. 11 terrorist attacks, but six years away from the 2008 housing market collapse that triggered the Great Recession.

Last year at this time, rates on a 30-year mortgage averaged 3.14%.

The Fed has raised its key benchmark lending rate five times this year, including three consecutive 0.75 percentage point increases that have brought its key short-term borrowing rate to a range of 3% to 3.25%, the highest level since 2008. At their last meeting in late September, Fed officials projected that by early next year they would raise their key rate to roughly 4.5%.

Mortgage rates don’t necessarily mirror the Fed’s rate increases, but tend to track the yield on the 10-year Treasury note. That’s influenced by a variety of factors, including investors’ expectations for future inflation and global demand for U.S. Treasurys.

Many potential homebuyers have moved to the sidelines as mortgage rates have more than doubled this year. Sales of existing homes have declined for eight straight months as borrowing costs have become too high a hurdle for many Americans already paying more for food, gas and other necessities. Meanwhile, some homeowners have held off putting their homes on the market because they don’t want to jump into a higher rate on their next mortgage.

The Fed is expected to raise its benchmark rate another three-quarter of a point when it meets next week. Despite the rate increases, inflation has hardly budged from 40-year highs, above 8% at both the consumer and wholesale levels.

The Fed rate increases have shown some signs of cooling the economy. But the rate increases have seemed to have little effect on the job market yet, which remains strong with the unemployment rate matching a 50-year low of 3.5% and layoffs still historically low.

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US mortgage rates top 7% for the first time in 2 decades

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Mortgage buyer Freddie Mac reported Thursday that the average on the key 30-year rate dipped to 6.66% from 6.70% last week. One year ago, the rate stood at 2.99%.

The average rate on 15-year, fixed-rate mortgages, popular among those looking to refinance their homes, came down to 5.9% from 5.96% last week.

Rapidly rising mortgage rates have more than doubled this year, pushing many prospective homebuyers out of the market.

Freddie Mac says that for a typical mortgage, borrowers who locked in at the higher end of the rate range during the past year would pay several hundred dollars more than borrowers who signed contracts at the lower end of the range.

Late last month, the Federal Reserve bumped its benchmark borrowing rate by another three-quarter of a point in an effort to constrain the economy, its fifth increase this year and third consecutive 0.75 percentage point increase.

The Fed’s aggressive action has decelerated a housing sector that — outside of the onset of the pandemic — has been hot for years. Existing home sales have declined for seven straight months as the rising cost to borrow money puts homes out of reach for more people.

The government reported last week that the U.S. economy, battered by surging consumer prices and rising interest rates, shrank at a 0.6% annual rate from April through June, consistent with its previous estimate for the second quarter.

Fed officials forecast that they will further raise their benchmark rate to roughly 4.4% by year’s end, a full point higher than they envisioned as recently as June. They expect to raise the rate again next year, to about 4.6%. That would be the highest level since 2007.

By raising borrowing rates, the Fed makes it costlier to take out a mortgage and an auto or business loan. Consumers and businesses then presumably borrow and spend less, cooling the economy and slowing inflation.

Mortgage rates don’t necessarily mirror the Fed’s rate increases, but tend to track the yield on the 10-year Treasury note. That’s influenced by a variety of factors, including investors’ expectations for future inflation and global demand for U.S. Treasurys.

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Average long-term US mortgage rates dip to 6.66% this week

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For months, they scoured listings, strategizing late into the night on which homes to target and working out how much they could afford, even if it meant using some of their retirement savings.

After visiting 200 listings and making offers on 15 homes that ultimately didn’t pan out, the Kaufmans finally found a home that fits at least some of their needs. They’ll be renting it, however.

“We found a place that’s smaller than we want, but it’ll work until we have something built or until the market cools off,” said Shannon Kaufman, 47.

America’s housing market has grown increasingly frenzied, and prices are out of reach for many buyers, especially first-timers. This spring, traditionally the busiest season for home sales, is more likely to deliver frustration and disappointment for aspiring homebuyers than it is homeownership.

The number of homes for sale nationally remains near record lows, fueling fierce competition among buyers vying for fewer homes. From Los Angeles to Raleigh, North Carolina, when a house does hit the market, it typically sells within days.

Bidding wars are common, often driving the sale price well above what the owner was asking. And would-be buyers planning to finance their purchase with a home loan are often losing out to investors and others able to buy a home with cash. A quarter of all homes sold in February were purchased with cash, up from 22% a year ago, according to the National Association of Realtors. Real estate investors accounted for 19% of transactions in February, up from 17% a year ago.

Nichol Khan, a project manager, and her husband Ed moved to Mesa, Arizona, from Phoenix two years ago to shorten their commute to work. Home prices in the Phoenix area have jumped 20% from a year ago to $500,000, according to Realtor.com.

“The prices just keep going up and up,” Khan said.

The couple has lost out on more than a dozen homes they bid on. Some of the homes ended up selling for less in cash than the couple had offered.

“We don’t have $500,000 in cash,” said Khan, 42. “We just could not be competitive with that.”

Fewer homes on the market and high prices have been the hallmark of the housing market for the past 10 years or so. Now, rising mortgage rates further complicate the homebuying equation. Higher rates could limit the pool of buyers and cool the rate of home price growth — good news for buyers. But higher rates also weaken their buying power.

The average rate on a 30-year home loan has climbed to around 4.7%. A year ago, average rates hovered just above 3%, according to mortgage buyer Freddie Mac. The increase follows a sharp move up in 10-year Treasury yields, reflecting expectations of higher interest rates overall as the Federal Reserve moves to hike short-term rates in order to combat surging inflation.

Would-be buyers who applied for a home loan in February faced a median monthly mortgage payment of $1,653, including principal and interest, an increase of 8.3% from a year ago, according to the Mortgage Bankers Association.

“It’s hard to believe, but I do think it’s going to be tougher this year, in some respects, than it was in previous years,” said Danielle Hale, Realtor.com’s chief economist. “So far, at least, we have seen the number of homes for sale continue to decline and prices continue to rise. Those two factors combined suggest that the competitive market is going to keep buyers on their toes.”

Buyers should set their sights on homes that are listed well within what they can afford, experts say.

“You should be looking 15%-20% below their limit; that gives them room for appraisal gaps, it gives them room for negotiating,” said Tracy Hutton, a broker with Century 21 in Indianapolis.

Being well prepared sometimes isn’t enough when a homeowner prefers to accept an all-cash offer, rather than sell to a buyer with financing.

Wendy Kaufman in South Florida couldn’t even get into an open house for a property on the market after she revealed the couple had a mortgage backed by the Veterans Administration.

“When they saw I had a VA preapproval they said, ‘Sorry we don’t want to work with you.’” she said.

Sometimes, buyers don’t have a chance to make an offer before a home is snapped up, sight unseen.

In the Miami area, so-called “blind offers” have become common as a way to get around other buyers, said Rafael Corrales, a Redfin agent.

One reason is the ultra-low level of homes for sale, which for the greater Miami metropolitan area, was down 55% in February from a year ago, according to Realtor.com.

While every market is unique, there is one common hurdle across the U.S.: affordability. The median U.S. home price jumped 15% in February from a year earlier to $357,300, according to the National Association of Realtors.

The San Jose, California, metro area had 40% fewer homes for sale in February than a year ago, according to Realtor.com. Buyers there have to navigate some of the most expensive home prices in the nation. The median home listing price climbed 13.3% to about $1.36 million in February from a year earlier.

The market trends are a bit more welcoming for buyers in the Midwest, including the Indianapolis metropolitan area, where the number of homes for sale was down about 23% from a year ago. The median home price there stood at $287,000 in February, up 8.5% from a year earlier.

In Raleigh, home listings were down a whopping 55% in February from a year earlier. Competition for fewer homes helped push the median home price to $430,000, a 9% increase from February 2021.

Those trends made for a more competitive market for first-time buyers like Lisa Piercey and her husband, Alex Berardo. First-time buyers made up 29% of all homes sold nationally last month. That share has averaged 31% annually over the past 10 years.

The couple began looking in December for homes at $350,000 or below. They offered $5,000 over the asking price on two properties but lost out to rival bidders.

“That was all we could afford,” said Lisa Piercey, a 32-year-old project manager. “It’s really defeating, really disappointing.”

In the end, the couple bought a townhome in a new construction community, though they see it as a stepping stone to a more spacious house with a big yard.

“It’s big enough that we can still start our family and then move when the market hopefully dies down in a couple of years,” she said.

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Homebuyers stymied by fewer homes, high prices, rising rates

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Prices for luxury housing in Miami jumped more than a quarter from 2020 to 2021, according to an analysis by the British-based firm, Knight Frank.

The firm analyzed price changes for the “most desirable and expensive property in a given location,” which is generally defined as the top 5% in the market by value for 46 cities across the world.

It is the first time Miami has topped the high-end residential price index since it was created in 2007.

“The hunt for larger accommodation, coastal living, and Florida’s low taxes acted as a key draw for a new breed of remote workers in the U.S.,” the report said.

Other cities with double-digit jumps in luxury home prices over the year were Seoul at 23%, Shanghai at 21%, Moscow at 21%, Toronto at 20% and San Francisco at 20%.

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Miami tops world in annual jump in luxury home prices

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With a residents’ clubhouse, a co-working lounge with complimentary Wi-Fi, a state-of-the-art fitness center complete with a cardio training wall and weight machines, the new complex will be the perfect suit for many.

CasaMara has an ideal location near Antique Row and El Cid neighborhood and is an unparalleled escape to a wonderland where anything is possible. The community will feature resort-style pool with private cabanas and in pool ledge seating areas, expansive pool deck with pavilion building, lounge areas, outdoor grilling, water features, and lush landscaping.

There will be a suite of children’s amenities including a wading pool, interactive playroom, and play park. Spacious outdoor whirlpool spa with therapeutic jets.

The Casamara social lounge will offer private dining and fireplace.

Other amenities include sports lounge with billiards, gaming, Nintendo Wii stations, 24 –hour fit gym with cutting edge equipment, co-working lounge with communal seating and private offices as well as a Bark Park, a community corner park with fountain, and onsite boutiques with street-level shopping and dining.

The project CasaMara will have 300 Class A apartments with a 16,000-square-foot clubhouse and 16,000 square feet of retail space along South Dixie Highway. The retail portion will be called The Plaza at CasaMara. The 10-acre property will have seven low-rise buildings designed by MSA Architects with interiors by ID & Design International. The Plaza will have on-street parking, landscaping and a corner park. The retail component is expected to open in the spring of next year.

To keep up to date with CasaMara, visit www.casamarawestpalm.com

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The Commerce Department reported Wednesday that builders started construction on 1.57 million homes at a seasonally adjusted annual rate, a decline of 3.6% from 1.63 million units in December. That had been the highest point since late 2006 at the peak of the housing boom of the last decade.

Economists had expected a slight pullback from the December surge, which was attributed in part to unseasonably warm weather which had allowed builders to start more construction projects.

Application for building permits, considered a good sign of future activity, jumped 9.2% in January to an annual rate of 1.56 million units.

Construction of single-family homes fell 5.9% to a seasonally adjusted annual rate of 1.01 million homes while construction in the smaller apartment category edged up 0.7% to 557,000 units.

After being a drag on economic activity for more than a year, home building rebounded last summer, spurred by rising demand as mortgage rates dropped in response to interest rate cuts by the Federal Reserve.

Economists believe housing will remain strong this year, helped by low mortgage rates and unemployment that is near a half-century low.

The National Associated of Home Builders/Wells Fargo housing index came in at 74 this month, just one point lower than in January. This builders’ confidence survey for the past three months has been at the highest levels since late 2017.

“Steady job growth, rising wages, and low-interest rates are fueling demand but builders are still grappling with increasing construction and development costs,” said Dean Mon, a New Jersey developer and the chairman of the home builders group.

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US Home Construction Dips 3.6% in January

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The District Flats will feature a modern-industrial designed, four-story building surrounding a central courtyard, swimming pool and deck area; a three-story building surrounding a garden amphitheater; and a three-level, 250-space parking garage enhanced by a large mural at the entry.

A dog park and a public park at the south end of the site is planned, and the project will also include 2,700 sq. ft. of commercial space that will be home to a stylish cafe. There will be 26 studio apartments; 86 one-bedroom, one-bath units; and 48 two-bedroom, two-bath apartments, along with a 3,000 sq. ft. clubhouse.

“This project will not only answer the growing need for housing around Downtown West Palm Beach but will also help solidify the Warehouse District as the city’s next hub of urban activity,” said Jack Weir, founder and managing principal of Eastwind Development. “We see great things ahead for both Palm Beach County and the City of West Palm Beach.”

Designed by MSA Architects, with Verdex Construction as the general contractor, The District Flats is located south of the trendy Grandview Public Market food hall and other nearby retail and entertainment outlets like Steel Tie Distillery, Steam Horse Brewing Company, and Surfing Florida Museum.

“The city has a tremendous need for affordable housing, and I’m glad that Eastwind Development was willing to provide a portion of that,” West Palm Beach Mayor Keith James said at the groundbreaking ceremony, Thursday, December 5.

All units will feature nine-foot ceilings, keyless door entries, programmable thermostats, tile & wood plank flooring, stainless steel appliances, granite countertops, pendant light fixtures, bedroom ceiling fans and energy and water conservation features designed to lower monthly resident utility bills.

The development will also feature a set-aside for workforce housing. Twenty (20%) percent (36 units) in the community will be set aside for households with an annual income equal or less than 140% of the 2018 annual median income (AM I) for Palm Beach County for studios ($75,460 income), 1 BR units ($80,850 income) and 2 BR units ($97,020 income) at the time of initial leasing, Rents for the workforce housing units are not projected to be lower than market rents. The workforce housing restrictions will last for a period of 15 years.

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The District Flats Breaks Ground in West Palm Beach

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Investors fearful that the trade war could sharply slow global economic growth have been buying bonds, sending the yield on the 10-year Treasury note to its lowest level since October 2016.

The average rate on the 30-year fixed-rate mortgage, which tracks the trajectory in 10-year Treasurys, fell this week to 3.60%, its lowest level since November 2016, according to Freddie Mac. It was 3.75% last week. A year ago the rate stood at 4.59%.

If the slide in bond yields continues, the average rate on the benchmark 30-year home loan could fall below 3.5%, housing economists say.

Lower mortgage rates give homebuyers more purchasing power, which could entice them to go house-hunting.

But with the supply of homes for sale down 15% since December, sales are lagging last year’s pace. The supply shortage is likely to limit any surge in sales.

“Demand can pick up, but if the supply does not pick up it just means prices will be accelerating higher,” said Lawrence Yun, chief economist of the National Association of Realtors. “Supply has been a major bottleneck.”

Also, homebuyers may not be immune to Wall Street’s jitters about a slowing economy, which could make them feel uneasy about buying a home.

“Given that a home is a major expenditure, people need to be confident about economic prospects over the long haul,” Yun added.

Investors have sought out safety in U.S. government bonds this week as the trade dispute between Washington and Beijing escalated again. President Donald Trump announced a new 10% tariff set to go into effect next month on Chinese imports that haven’t already been hit with prior tariffs. China retaliated by allowing its currency, the yuan, to weaken against the U.S. dollar.

The yield on the 10-year Treasury touched its lowest level in nearly three years, falling as low as 1.60% from 1.74% late Tuesday, before climbing back to 1.72%. It was above 3% in late November.

The spread between the 10-year Treasury yield and the average rate on a 30-year fixed-rate mortgage has historically been about 1.7 percentage points, said Odeta Kushi, deputy chief economist at First American Financial.

That means, if the bond yield for 10-year Treasurys drops back to 1.60%, the average rate on a 30-year mortgage could drop as low as 3.3%, though 3.54% is more likely, she said.

At bond yields’ current levels, Yun expects the average rate on the 30-year fixed rate mortgage to drop to around 3.4% or even 3.3%.

Such low rates could spur a pickup in home loan refinancing. The last time average weekly long-term mortgage rates were below 3.5% was three years ago.

The scarce supply of homes on the market has kept prices rising this year. The median sales price of a previously occupied U.S. home climbed 4.3% in June from a year earlier to $285,700. By comparison, wage growth has averaged about 3%.

The trend has held back home sales, which were down 2.2% over the 12 months that ended in June. Sales of newly built homes jumped 7% in June, but through the first half of the year have only risen 2.2% from a year earlier, despite such positive trends as a robust job market and falling mortgage rates.

Lower rates may prove irresistible for would-be homebuyers, especially those struggling to keep up with rising home prices. The price for a previously occupied U.S. home climbed 4.3% in June from a year earlier, according to NAR.

“It certainly will help to make housing more affordable, obviously, as mortgage rates come down,” Kushi said. “The issue will be will folks have something to buy?”

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As Mortgage Rates Drop, the Trick is Finding a House

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