Mortgage rates rise above 5% again

The 30-year fixed-rate mortgage averaged 5.22% in the week ending August 11, up from 4.99% the previous week, according to Freddie Mac. That’s significantly higher than this time last year when it was 2.87%.

“Despite continued price volatility, recent data suggests that the housing market is stabilizing as it transitions from increased activity during the pandemic to a more balanced market,” said Sam Khater, chief economist at Freddy Mac.

Earlier this week, the consumer price index for July He indicated that the rate of inflation had begun to slow, This is mainly due to lower energy costs. Housing, which makes up nearly a third of the basket of goods and services that the CPI tracks, moderated slightly last month but remains up.
“Markets are seeking more certainty about the economic outlook, as incoming data continues to highlight a steady level of business activity and consumer spending,” said George Ratio, director of economic research at “While fears of a recession stay highAugust seems to be offering a slight break.”

Affordability remains a challenge

One of the reasons housing prices continue to rise is the lack of homes for sale. “Supply is still fairly tight in most markets,” Khater said. “The result is that home prices will likely continue to rise, but at a slower pace for the rest of the summer.”

In addition to rising housing prices, Inflation takes a bigger part The income of potential home buyers and the increase in the cost of borrowing reduces their purchasing power.

A year ago, a buyer who paid a 20% discount on a $390,000 median home and financed the rest with a 30-year mortgage at a 2.87% fixed interest rate received a monthly mortgage payment of $1,294, according to the figures. From Freddy Mac.

Today, a homeowner who buys a home at the same price at an average rate of 5.22% will pay $1,717 per month in principal and interest. That’s an extra $423 each month, according to numbers from Freddie Mac.

The highest cost of home financing Already affected the buyers, with sales of both new buildings and existing homes declining in recent months. With potential homebuyers responding to these rising costs, real estate markets are showing signs of rebalancing.
“The number of homes for sale increased strongly in July, heading towards levels not seen since mid-2020,” Ratio said. “With more properties available and less competition, more homeowners They are starting to adapt to the new reality And resorting to price cuts to motivate buyers.”

The share of listed homes dropping in price was 19% in July, closing at levels not seen since 2017, according to In addition, the pace of price growth slowed down.

“These shifts signal a welcome change for buyers who are still in the market,” Ratio said. “The coming fall season may present a better opportunity, as long as the stock landscape continues to improve, as we’ve seen in recent months.”

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