Search

U.S. Mortgage Rates Climb Above 7%, a 21-Year High - The New York Times

The average 30-year fixed-rate mortgage has climbed above 7 percent, making it harder for buyers to afford homes, which are already in short supply.

Mortgage rates surged to a 21-year high this week, climbing back above 7 percent, a jump that will make it even harder for buyers to afford homes in a market hampered by high prices and low inventory.

The average 30-year fixed-rate mortgage — the most popular home loan in the United States — was 7.09 percent, up from 6.96 percent last week, Freddie Mac said on Thursday. A year earlier, the 30-year rate was 5.13 percent.

The current rate is the highest since April 2002. In the intervening period, home buyers enjoyed years of falling rates, which even dipped below 3 percent at the beginning of the pandemic.

But as rates began abruptly rising last year, when the Federal Reserve started lifting interest rates to rein in rapid inflation, the housing market has stagnated, as owners with low mortgage rates have been unwilling to put their homes up for sale.

In June, sales of existing homes fell nearly 19 percent from the year before, according to the National Association of Realtors. The scarcity of listings has kept housing prices elevated. And the median price of an existing home was $410,200 in June, the second-highest since the organization began tracking the data in 1999, down only marginally from a high of $413,800 a year ago.

And experts do not think the housing market will cool off anytime soon. On Tuesday, Goldman Sachs revised upward its forecast for home prices, predicting a 1.8 percent rise in prices this year and 3.5 percent jump in 2024. “Affordability remains burdensome,” analysts at the bank said in a report, citing a tighter housing supply and a steady demand for homes.

That’s bad news for would-be home buyers like Kathleen Schmidt, who rents a home in Toms River, N.J., with her husband and two teenage children. She said that they were trying to save for a 20 percent down payment on a townhome nearby, and that the jump in mortgage rates was discouraging.

“I just felt in the pit of my stomach: We are never going to be able to buy a home,” said Ms. Schmidt, who owns KMSPR, a public relations firm for authors and publishers.

“My dream forever was to own a home someday because it’s something my parents never did,” she added. “We want something left for our kids.”

Affordability is a persistent challenge for home buyers, said Jeff Ostrowski, an analyst at the personal finance company Bankrate, who predicted that rates would remain elevated for some time.

“It doesn’t seem mortgage rates are going to fall, and home prices are not going to come down,” he said. “I think buyers are going to have to buckle their chin straps and figure out how to make it work.”

The scarcity of existing homes for sale has pushed buyers to consider new construction. The sale of new homes climbed nearly 24 percent in June from the same period a year earlier, the Census Bureau reported. Housing starts, a measure of the construction of new homes, increased about 6 percent in July from the previous year.

“The builders are making profits, and their stock margins have increased from a year ago,” said Lawrence Yun, the chief economist at the National Association of Realtors. He added that national builders like KB Home, Lennar and Toll Brothers would continue to add inventory to make Wall Street happy, but that they were focused more on higher-priced homes.

For home buyers, finding affordable options remains difficult. The Federal Reserve has lifted its policy interest rate, which underpins borrowing costs across the economy, to the highest level in 22 years as it tries to slow inflation by cooling the economy. Although price pressures have abated, with the annual rate of inflation moderating from nearly 9 percent last year to just above 3 percent last month, a recent uptick in gasoline prices could prop up inflation figures.

Officials at the central bank have suggested that one more rate increase may be possible this year. They expect to cut rates in 2024, but they think it could be several years before rates return to the lower levels that were common before the pandemic.

Mortgage rates generally track the yield on 10-year Treasury bonds, which are influenced by a variety of factors, including expectations around inflation, the Fed’s actions and how investors react to all of it. On Thursday, the 10-year yield rose above 4.3 percent for the first time since 2007.

Adblock test (Why?)

Article From & Read More ( U.S. Mortgage Rates Climb Above 7%, a 21-Year High - The New York Times )
https://ift.tt/HlDy2wB
Business

Bagikan Berita Ini

0 Response to "U.S. Mortgage Rates Climb Above 7%, a 21-Year High - The New York Times"

Post a Comment

Powered by Blogger.