What do you need to know about the housing market & Fed rate hike?
The Federal Reserve voted to raise interest rates by another quarter point last week in its ongoing battle to tame inflation and bring price stability back to the economy. This marks the 10th straight rate hike since March 2022. While raising interest rates make borrowing for businesses tighter, what does it really mean for the housing market? Several prominent economists have made their opinions known.
Redfin chief economist Taylor Marr stated, “The impact on mortgage rates will be what ultimately determines if the housing market gets a boost or is dampened further.” Marr also claimed that if the Fed had paused rate hikes on May 3rd, mortgage rates likely would have started to cool off.
When asked for a prediction on the future, chief economist for the National Assocation of Realtors, Lawrence Yun, said, “Mortgage rates are likely to descend lower later in the year as the consumer price inflation calms down and changes the thinking of the Fed from tightening to possibly loosening the monetary policy.”
Mortgage rates wait for inflation data
The national average for a 30-year fixed rate mortgage closed up 0.03% to 6.68%* on Tuesday. The market was sideways for most of the day. It appeared that most traders didn’t want to commit to positions ahead of Wednesday’s new inflation data.
A new bill in Washington state signed to increase housing supply
With several large metro areas in Washington state and a tight housing market in most areas, Washington governor Jay Inslee signed a bill into law to legalize duplexes and fourplexes in nearly every city.
Washington state will need nearly one million new homes built in the next few decades to keep up with its population and demand. The bill signed by Governor Inslee overrides local zoning legislation to allow more multi-family buildings to be constructed instead of only single-family homes.
The law requires cities with populations between 25,000 and 75,000 to allow duplexes in residential areas. There are also additional requirements for fourplexes as long as one of the units meets affordable housing standards.
* National average rates accurate as of 5/2/23 from MortgageNewsDaily.com and are not advertised rates from Guaranteed Rate.
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