Mortgage Rates on the Rise, Reaching 7 Percent
Housing production decelerated last month amid higher rates.
Mortgage rates are approaching the 7 percent mark after dipping to nearly 6 percent a few weeks ago, posing additional challenges for the American housing market.
The surging mortgage rates are likely to maintain the ongoing “lock-in effect,” with homeowners hesitant to sell as they have lower existing mortgage rates. Selling now would mean acquiring new properties at higher rates.
Forecasters anticipate that the elevated mortgage rates will keep inventory growth and existing home sales “muted” throughout the upcoming year, Palim mentioned.
Fannie Mae’s Economic and Strategic Research team initially projected mortgage rates to drop below 6 percent early next year. However, they have revised their forecast and now anticipate rates to hit 6.3 percent by the end of next year.
Temporary Demand Surge
Despite the rising mortgage rates, early-stage homebuying activity is at its highest level in 15 months, according to Redfin. The recent surge in buyers and sellers is a post-election trend, according to Chen Zhao, the economic research lead at the company.
