Good news, house hunters: Home prices have started to cool. Prices are still rising, but annual home price appreciation slowed from April to June, with June marking the strongest single-month deceleration in home price growth ever, according to Black Knight, a mortgage data analytics firm.
The bad news: Rising mortgage rates are making homeownership less attainable for some buyers.
Although mortgage rates have been in a state of flux this year, the 30-year fixed-rate average ballooned from 3.2% in January to 5.3% at the end of July, according to Freddie Mac. Consequently, the national median mortgage payment hit $1,893 in June, a $509 increase since the beginning of the year, says the Mortgage Bankers Association.
Inflation, geopolitical tensions and fears of a recession are stoking higher mortgage rates, says Odeta Kushi, deputy chief economist at First American Financial Corp., a title, settlement and risk solutions provider based in Santa Ana, Calif. "The Federal Reserve has been reducing its balance sheet and raising its benchmark rate in an effort to tame inflation," she says. "That has resulted in higher 10-year Treasury yields, which has resulted in higher mortgage rates."
Those rising mortgage rates are pushing some buyers out of the market and leading some others to back out of deals-approximately 60,000 home purchase agreements nationwide fell through in June, Redfin data found. The brokerage also released a study in June that found a home buyer on a $2,500 monthly housing budget had lost nearly $120,000 in home-purchase power since the end of 2022.
First-time home buyers are bearing the brunt of climbing mortgage rates, Kushi says: "It's getting very difficult for first-time buyers to enter the market, largely because they don't have money that existing homeowners get from the sale of their current home to fund their next home purchase."
Denne historien er fra October 2022-utgaven av Kiplinger's Personal Finance.
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Denne historien er fra October 2022-utgaven av Kiplinger's Personal Finance.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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