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Encore: Rising interest rates plunge the housing market into a deep freeze

AILSA CHANG, HOST:

This country's home-buying frenzy is really, definitely over. Home sales have fallen for 10 straight months. It's the longest streak of declining sales in more than two decades. NPR's Arezou Rezvani spoke with buyers and sellers.

AREZOU REZVANI, BYLINE: Thirty-four-year-old Evan Paul went into 2022 thinking this would be the year his family would finally buy a home.

EVAN PAUL: We just kind of got to that place in our lives where we were financially very stable. We wanted to start having kids, and we wanted to just kind of settle down.

REZVANI: Paul and his wife, who both work in the biotech industry, did end up having a baby, a little girl, just a couple of weeks ago. But they never did move up and out of their two-bedroom condo. Initially, it was because of high home prices in their city of Boston. A year ago, low interest rates unleashed a home-buying frenzy, and they were outbid every time.

PAUL: There'd be, you know, two dozen other offers, and they'd all be $100,000 over asking.

REZVANI: Then the Fed started raising interest rates. And after a few months, it was the high mortgage rates that priced the Pauls out again.

PAUL: Yeah. Eventually, the anxiety just caught up to me. And we just decided to call it quits and hold off.

LAWRENCE YUN: There are far fewer buyers in the marketplace.

REZVANI: That's Lawrence Yun, chief economist for the National Association of Realtors. He says while buyers like the Pauls have been pulling back, sellers are also reluctant to jump into the market because they'd also be slammed by a pricey mortgage.

YUN: To reenter the market today, they would have to give up that 3% and possibly get the new loan at much higher interest rates.

REZVANI: And that right there is what's contributing to something of a freeze in the housing market, says Susan Horowitz, a New Jersey-based real estate agent.

SUSAN HOROWITZ: The sellers aren't putting their houses on the market. And the buyers that are out there - certainly, the power of their dollar has changed with rising interest rates. So there is a little bit of a standoff.

REZVANI: Surprisingly, that standoff hasn't had much of an impact on prices. Home prices have remained high despite the slump in sales activity.

HOROWITZ: Because there's no inventory. So anything that comes on the market is the one salmon running upstream. And every bear has just woken up from hibernation.

REZVANI: But even that trend is beginning to crack in some markets.

It's been slow going lately at agent Elijah Shin's open house in Los Angeles, where he sweeps the sidewalk, waiting for the occasional visitor to swing by.

ELIJAH SHIN: Well, I think we're in the transition again. And, of course, no one knows the future, but we do look like we need a market correction here and there. It was a few crazy years.

REZVANI: He gives a thorough tour to anyone who comes through...

SHIN: And this can be a closet. And this is the entire master suite.

REZVANI: ...And connects with prospective buyers however he can.

SHIN: You want a flyer? We'll be here Tuesday and Thursday if you want to...

REZVANI: But things are just different now.

SHIN: Well, a year ago, this property would've already been sold. I think this home will sell, too. It's just going to take a little bit longer.

REZVANI: Or a lot longer. This little starter home in one of the more coveted neighborhoods of Hollywood first went on the market back in August. Four months later, it's still waiting for an offer. Arezou Rezvani, NPR News, Los Angeles.

(SOUNDBITE OF KYLE MCEVOY AND EZZY'S "GARDEN") Transcript provided by NPR, Copyright NPR.

Arezou Rezvani is a senior editor for NPR's Morning Edition and founding editor of Up First, NPR's daily news podcast.