According to Freddie Mac reports, mortgage rates continued inching up recently, nearing a threshold that would bring the average American household to a financial tipping point, warns Nadia Evangelou, senior economist, and director of forecasting for the National Association of REALTORS®. The 30-year fixed-rate mortgage jumped to an average of 5.66%. A 5.7% mortgage rate would force the typical household to spend over 25% of its annual income on a median-priced home, Evangelou notes on the Economists’ Outlook blog. Most financial experts consider homeowners to be “house burdened” at that level. There’s a strong likelihood that mortgage rates could move even higher, Evangelou writes, noting that the recent rise in the 10-year Treasury yield is influencing borrowing costs. Mortgage rates are nearly double what they were a year ago. However, relief may be on the horizon for buyers. Fannie Mae predicted that the 30-year fixed-rate mortgage will drop to an average of 4.5% in 2023. Still, economists say home buyers who can afford to purchase now are better off moving forward rather than waiting for lower mortgage rates. Even if borrowing costs drop next year, high home prices likely will remain a challenge, Keith Gumbinger, vice president of the research firm HSH, recently told CNBC.
Source and link to the full article: Mortgage Rates Rise Again, Nearing Affordability Threshold | Realtor Magazine
Based on a recent report by Redfin, the average home sold for less than its list price for the first time in over 17 months during the four-week period ending on August 28th. Homes are simply not selling at the breakneck pace they were six months ago, when strong demand butted up against tight supply, bidding wars were the norm, and a seller could often get a signed contract in under a weekend. Homes in August sat on the market an average five days longer than they did a year ago, the first annual increase in time on the market in more than two years. The supply of homes for sale is also rising fast, up nearly 27% from a year ago, even as fewer sellers decide to list. Pending sales in July, which represent signed contracts on existing homes, and which are the most recent sales data available, were nearly 20% lower than July 2021, according to the National Association of Realtors.
Source and link to the full article: More home sellers drop their asking price as the housing market cools (cnbc.com)
Based on recent Fed meetings, interest rates on fixed-rate mortgages are likely to remain fairly stable in the first three weeks of September. The forecast gets murkier at the end of the month. That's because the Federal Reserve will update its interest rate policy on September 21st. Rates often stabilize in the two or three weeks prior to Fed meetings. If that pattern holds in September, the rate on the 30-year mortgage will hang out in a range between about 5.75% and 6% until the Fed announcement. The aftermath of the announcement could be another matter, with up-and-down swings in mortgage rates. But borrowers should brace themselves: Mortgage rates could ratchet upward, like someone climbing a ladder two rungs up and one rung down. Such a path would be consistent with this year's upward trend for mortgage rates.
Source and link to the full article: Mortgage Rates in September: A Smooth Ride, Then Turbulence | Real Estate | madison.com