In the latest sign that mortgage rates fell last week, rising interest rates are starting to dampen demand in the booming housing market, but experts say historically low levels of inventory could push prices down. Demand won’t be quick, with some forecast prices should continue to rise throughout the year.
Mortgage applications fell 6.5% from the week before in the week ending June 3, according to the Mortgage Bankers Association’s weekly mortgage applications Survey,
In a statement, Joel Kahn, MBA, referred to the increase in interest rates driven by the Federal Reserve’s efforts to combat inflation, making home buying more expensive and, as a result, reducing both purchase and refinance applications to the lowest in 22 years. level is pushed.
Although they fell early in the pandemic, mortgage rates have been raised since the Fed began raising rates in April. latest 30-year fixed-rate mortgages averaged about 5.1%, down from 3% a year ago.
“Consistently low” housing inventory has also driven up prices and dented demand, Kahn said, adding that “the challenges of deteriorating affordability have been particularly difficult for potential first-time buyers.”
In a note last week, Bank of America economists told customers the decline in affordability last seen during the housing crisis fueled the Great Recession, and warned that short supply will likely drive prices up 15% this year. % will increase.
The latest data comes after S&P CoreLogic reported last week that home prices skyrocketed in March by the highest rate in 35 years, with S&P DJI managing director Craig Lazzara saying it’s still unclear whether the price will benefit. How long will it take for the fall to start?
According to the Census Bureau, the average new home price hit a record $450,600 in April, up nearly 20% year over year.
Historically high savings rates, government stimulus measures, low supply and interest rates helped ignite the home-buying frenzy during the pandemic, but signs of a recession have surfaced as the Fed extended its most aggressive interest rate hike in two decades. The walking cycle has been adopted. According to data released last month, sales of pending homes fell for the sixth consecutive month in April to the lowest level in nearly a decade, while new home sales fell nearly 17% from March.
“While one can safely predict that price gains will begin to ease, bearish timing is a more difficult call,” says Lazara.
Home prices rise 20.6% in biggest jump of this century (Forbes)
Pending home sales fall to lowest level in nearly a decade – the worst is yet to come (Forbes)
Credit: www.forbes.com /