Mortgage Payments Rise
Mortgage rates continue to surge, with Freddie Mac’s latest report showing a 30-year fixed-rate mortgage survey averaged 6.73%, up from 6.65% a week ago and well above the 3.85% level a year ago. This marks a record high for mortgage payments, with Redfin estimating that the monthly mortgage payment on the median asking home price is now at an all-time peak and 29% higher than a year ago. These rising rates have had a significant impact on the housing market.
Redfin’s Homebuyer Demand Index, which measures requests for home tours, was down 4% W/W and 2% weaker than a month ago, reflecting the increasing unaffordability of homes. Google searches for “home for sale” were also down 13% Y/Y for the week ended March 4, but they were still 48% higher than their December low. This suggests that while buyers are still interested, they may be struggling to find affordable options.
Redfin’s data shows that over the past month, prices dropped each week for 4.8% of listings, up from 2% a year ago. This indicates that sellers may be adjusting their expectations as the market cools slightly. However, active listings rose 18% Y/Y, the smallest increase in more than three months, suggesting that there is still a surplus of available homes on the market.
Despite the recent price drops, median home sale prices over the past four weeks were down 1.2% Y/Y to $353K, 12% off their May 2022 peak. However, prices have trended modestly upward after a near-term trough at $347K in February. This suggests that while the market may be cooling slightly, it is still strong overall.
The rise in mortgage rates can be attributed to a variety of factors, including inflation concerns, rising Treasury yields, and the Federal Reserve’s recent decision to taper its bond-buying program. While higher rates may make it more difficult for some buyers to afford homes, they also reflect a strong economy and a healthy housing market. However, it remains to be seen whether this trend will continue in the coming months.
As a consequence of rapid high rate increases, rising mortgage rates have led to record-high mortgage payments and have had a significant impact on the housing market. While the market may be cooling slightly, it is still strong overall, with a surplus of available homes and modest price increases. As the economy continues to recover and inflation concerns persist, it remains to be seen how mortgage rates will continue to evolve.