The housing market appears to be stuck heading into autumn, with sales activity likely to stay stagnant until housing inventory increases and mortgage rates decline to more affordable levels.
Mortgage Rates The rate on the most popular US mortgage just jumped back above 7% for the first time since March. According to Bankrate, on Wednesday the average rate for a 30-year fixed mortgage hit 7.06%, up 12 basis points from last week. Some housing experts are warning that rates could keep climbing toward 8%.
Economy The economy remains buoyant, which is encouraging for consumers. Though while inflation has decelerated, firmer economic data have put upward pressure on mortgage rates which, in the face of affordability challenges, are straining potential homebuyers.
Takeaway The housing market is currently stagnant due to high mortgage rates and low inventory. Experts predict that sales activity will remain stagnant until housing inventory increases and mortgage rates decline to more affordable levels.
References:
- Housing market “stuck” as mortgage rates remain above 7%
- Mortgage rates drop for a second week, but remain above 7%
- How the U.S. housing market got stuck in the ’80s
- Housing affordability dips as 30-year mortgage rate tops 7% again
- Freddie Mac‘s Primary Mortgage Market Survey
- What mortgage rates over 7% mean for the housing market – CNN
