There’s a lot of doubt as to whether or not the economy is in a recession, but the recent National Association of REALTORS® confirmed we’re definitely in a housing recession. Existing-home sales dropped 5.9% in July. The sixth consecutive down month.
Much of the pull back is related the rising average home price of $408,300. However, for homebuyers still in the market, we’re seeing a record pace with the typical home in July going under contract in just 14 days.
The continued rate hikes from the Federal Reserve have been a major factor in pushing mortgage rates up, making purchasing a new home more expensive. If that weren’t enough, home prices are up over 30% over the last couple of years.
While it’s grim news, if the Fed manages to slow home sales for a while, prices will hopefully start to come down. Analysts still predict the Fed will hike interest rates again in September by 50- to 75-basis points. After that increase, we may start to see mortgage rates and home prices begin to moderate.
Rates still up, but nowhere near historical highs
The interest rate for a 30-year fixed mortgage jumped again to 5.48% as inflation continues its drag on the market. While it’s cause for concern, mortgage rates are still below their highs of 5.98% back in June of 2020. Historically, 5% is still not too shabby considering in 1981, mortgage rates hit their all-time high of 18.53%.
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All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. Guaranteed Rate does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error-free. Some information in the publication may have been provided by third parties and has not necessarily been verified by Guaranteed Rate. Guaranteed Rate its affiliates and subsidiaries do not assume any liability for the information contained herein, be it direct, indirect, consequential, special, or exemplary, or other damages whatsoever and howsoever caused, arising out of or in connection with the use of this publication or in reliance on the information, including any personal or pecuniary loss, whether the action is in contract, tort (including negligence) or other tortious action.
John Kistner is Guaranteed Rate’s Market Analyst. Market Updates are designed to provide readers with a high-level yet insightful view of how economic news, events and trends affect mortgage rates and the homebuying process.