An Uptick in Mortgage Rates Sent U.S. Home Buyers Into Retreat

An Uptick in Mortgage Rates Sent U.S. Home Buyers Into Retreat

US housing markets have seen a bump in the road to recovery as mortgage rates have risen for two straight weeks, ending a streak of steady declines.

In the week ending Thursday, Redfin’s domestic demand index – a measure of demand for tours and other services – fell 1% from the previous week, the first drop after a month of d increases, according to the latest data from the Seattle-based brokerage. .

Buyer demand stagnated in part due to higher mortgage rates triggered by new economic data. “The somewhat disappointing inflation numbers put a wet blanket on homebuyers after rates below 6% lit a fire beneath them a few weeks ago,” said Chen Zhao, head of economic research. at Redfin, in the report.

For the week ending Thursday, the average 30-year fixed mortgage rose for the second week in a row to 6.32%, from 6.12% a week ago. 30-year mortgage rates reached a 20-year high of 7.08% towards the end of October and have since slowly declined.

The two-week increase “does not mean rates are going to exceed 7%,” Ms Zhao said. “But it is a reminder that the housing market recovery will remain intermittent until we see inflation and the overall economy improve for a longer duration.”

Compared to a year ago, Redfin’s demand index is down 22%. But it is up 17% from its lowest point recorded in October 2022, according to the report.

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As buyers retreat to the sidelines, sellers need to adjust their price expectations.

In the four-week period ending Sunday, the median asking price for new listings was $378,118, up 1.2% year-over-year, the smallest increase since May 2020, according to the Redfin report.

The median selling price, meanwhile, rose 1% year-over-year to $346,725, with 20 of the 50 most-populated metros tracked recording declines.

Metros that experienced a housing market boom during the pandemic saw the biggest decline, led by Oakland, Calif., where the sale price fell 9.3% year-over-year. Other bear markets include Sacramento (-7.4%), Austin (-7.1%), Phoenix (-5.5%) and Detroit (-5.4%).

The metros that saw the largest price increases in the four weeks ending Sunday were: Milwaukee (13.6%), West Palm Beach, Florida (11.2%), Miami (9.9%), Columbus , Ohio (9.6%) and Fort Lauderdale (8.9%). %), according to Redfin.

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