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The frenzied housing market has hit a serious speed bump


The housing market is in trouble.


The number of sales in September is down 24% from a year ago to the lowest level in a decade. Prices are falling a bit, too.

INSKEEP: NPR's Chris Arnold joins us now to talk about whether the market could get even worse. Hey there, Chris.


INSKEEP: I think it's obvious to most people, but talk us through what's happening to the market.

ARNOLD: Well, as you probably would have guessed, this has everything to do with interest rates. I mean, they've gone from 3% at the start of the year to now up above 7%. I mean, that is a huge jump for something as expensive as a house. It adds a thousand dollars a month, about, to the monthly payment for a typical house. And that's making people rethink if they can afford to buy a home. And a lot of families with kids are struggling with this right now. I talked to Heather Gant. She used to be a Navy diesel mechanic. Her husband's an officer in the Navy, and he's away on a ship now. And they've agreed to buy a new home that's almost built in Virginia.

HEATHER GANT: He said last night that he hasn't been sleeping, thinking about it. This keeps me up every night. And then he just said, we're so screwed. And so then I said, well, then let's just back out.

ARNOLD: Actually, despite all of the angst, they are going to buy the place. But a lot of buyers just really can't afford it. And this affects sellers, too. You know, if you've got a mortgage at 3% or less on your current house, you know, it's - you don't really want to go buy another house and pay 7% on a mortgage. So that's keeping homes off the market. So both ways, this is slowing things down.

INSKEEP: Chris, even before this happened, the housing market seemed dysfunctional and choked. There weren't enough houses going on the market. Prices were going through the roof. So where does it head now?

ARNOLD: It depends on what parts of that you look at. I mean, there are some ominous signs. Sales have fallen for eight straight months now, eight months in a row fewer homes sold than the month before. That does not happen very often. I talked to Lawrence Yun about this. He's the chief economist for the National Association of Realtors.

LAWRENCE YUN: The last time we saw this is back in 2007, essentially a few months right before the great housing market crash that occurred. Now, of course, there are some differences.

ARNOLD: There's some very big differences. I mean, back then, millions of people had these subprime mortgages that were - just had these crazy terms where the payments went so high, no one could afford them.


ARNOLD: That led to a wave of foreclosures. And so we had this glut of homes for sale, way too many homes. Today, it's the opposite. People have fixed-rate, safe mortgages that they can afford, and we have a housing shortage. Here's Lawrence Yun.

YUN: We had over 4 million homes available for sale back in the housing market crash of 2008, 2009, 4 million. Today, we are just at 1 million level. So still very tight inventory condition.

INSKEEP: Oh, wait a minute. The dysfunctional issue that I mentioned before, the shortage of homes for sale, might actually save the market?

ARNOLD: Exactly. You know, and nationally, most economists think, OK, prices might fall a bit, some say 10% from the top peak, maybe a little more, but not a crash. And it's actually amazing. I mean, homes are selling on average in just 19 days. That's really fast. So even with higher rates and fewer sales, there still just aren't enough homes. And they're selling quickly.

INSKEEP: What are you hearing from realtors?

ARNOLD: I check back in with a realtor we've been talking to during the really frenzied market of the past couple of years. Her name's Gabriela Raimander, and she's in Saint Petersburg, Fla.

GABRIELA RAIMANDER: Now we're seeing a normalcy again. Yes, there are open houses. People are actually going. They're looking at it. The buyers have definitely more of a chance to get a property.

ARNOLD: And if you can afford these rates, you can even bid a little under the asking price now, Steve.

INSKEEP: Chris, thanks so much.

ARNOLD: Thank you.

INSKEEP: His reporting is always full price. NPR's Chris Arnold. Transcript provided by NPR, Copyright NPR.

Steve Inskeep
Steve Inskeep is a host of NPR's Morning Edition, as well as NPR's morning news podcast Up First.
Chris Arnold
NPR correspondent Chris Arnold is based in Boston. His reports are heard regularly on NPR's award-winning newsmagazines Morning Edition, All Things Considered, and Weekend Edition. He joined NPR in 1996 and was based in San Francisco before moving to Boston in 2001.
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