Published by Forbes.com | February 17, 2023
This week’s inflation data has pushed mortgage rates to the highest level in months—already sidelining some potential home buyers.
According to real estate brokerage Redfin, home buying demand, as measured by tour requests from prospective homebuyers, fell for the first time in more than a month last week as mortgage rates jumped to nearly 6.8% from less than 6.2% in January following a worse-than-expected inflation reading on Tuesday.
“Inflation is cooling too slowly for the Federal Reserve to ease up on interest-rate hikes,” says Redfin economist Chen Zhao, who notes ongoing price spikes mean mortgages are unlikely to fall much in the next few months—making the housing market less attractive for a slew of some prospective buyers, some 85% of which already hold mortgages at rates well below 6%.
“Buyers have been hypersensitive to rates since the start of the pandemic,” says Los Angeles Redfin agent Justin Vold, who cautions that prospective buyers should be careful to commit to higher interest rates for all 30 years of their mortgage because it remains very unclear when rates will fall—even if they will inevitably come down.
The median sales price for an existing home has already fallen about 11% to $366,900 from a record high of $413,800 in June, according to the National Association of Realtors.
