8/27/2023 0 Comments Home inventoryMortgage rates may stay there in the coming months. Nonetheless, perpetually-high home prices, combined with mortgage rates holding steady well over 6%, have drastically weakened the housing market. In prepared remarks to lawmakers during his Semiannual Monetary Policy Report to Congress, Federal Reserve Chairman Jerome Powell testified that the Fed’s process to get inflation down to its 2% target goal still has “a long way to go.”Īt the same time, in response to questions from Representative Steven Horsford (D-NV), Powell pointed out that overheated home prices have flattened out from two years ago due to the Fed raising rates. The Fed doesn’t plan to stop there, revealing new projections that the rate could go as high as 5.6% by the end of 2023. A Fed rate hike indirectly impacts long-term home loans, such as 30-year, fixed-rate mortgages. The federal funds rate hovered near zero in March 2022 when the Fed began raising rates. The federal funds rate is the rate financial institutions lend to each other overnight.Įven so, mortgage rates remain high partly due to the central bank’s aggressive series of rate increases. The decision to pause broke a rapid 15-month rate-hiking streak the Fed unleashed to rein in runaway inflation. At the same time, fears of ongoing inflation, an impending recession and more interest rate hikes still hang in the air.įollowing a surge in the first week of June, mortgage rates wobbled in a narrow range as Federal Reserve policymakers voted to hold off on raising the federal funds rate at its June meeting. Housing market activity remains weak overall, thanks to high mortgage rates, elevated home prices and constrained housing inventory-a trifecta of headwinds perpetuating the housing affordability crisis. For instance, in May, prices grew in the Northeast and Midwest but fell in the West. While home prices aren’t as high as the record prices of June 2022, data suggest that where home prices dip or climb this year remains heavily region-specific. These and other factors form a perfect affordability crisis storm that continues to sideline many aspiring homeowners. Though the median existing-home sales price edged lower year-over-year for the fourth consecutive month-a promising sign for home shoppers-experts don’t expect substantial, nationwide price declines anytime soon.ĭespite high mortgage rates, the market remains as competitive as ever thanks to strong demand coupled with tight inventory supply, due, in part, to those who purchased homes in recent years at record-low interest rates staying put. Meanwhile, existing home sales remained relatively flat in May, rising 0.2%, according to the National Association of Realtors (NAR). A basis point is one-hundredth of one percentage point. The national average 30-year fixed mortgage rate decreased by eight basis points in June but began to inch back up at the end of the month. Though summer temperatures are heating up, it looks like a tepid season ahead for the housing market.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |