Published by REALTOR.com | November 10, 2022
For would-be buyers who have had their home searches foiled or delayed by soaring mortgage interest rates, the housing market is likely to get worse before it gets better.
Mortgage rates are expected to keep rising after new indicators showed that inflation rose 7.7% year over year in October, according to a Bureau of Labor Statistics report released on Thursday. The U.S. Federal Reserve has been hiking its interest rates in an all-out war against stubbornly high inflation, leading to the surge in mortgage rates.
The hikes appear to be making a dent as inflation was down a little from 8.2% year over year in September. But it was still high enough that the Fed is likely to continue to shock the economy with more rate hikes that are pushing the nation to the brink of a recession.
When the Fed raises its rates, mortgage rates typically follow—much to the displeasure of homebuyers. Those higher mortgage rates have priced many first-time buyers out of homeownership, while others have been forced to drastically reduce their budgets and expectations.
Mortgage rates have more than doubled since the start of the year, jumping from 3.22% in January to 7.08% in the week ending Nov. 10, according to Freddie Mac.
Homebuyers today are paying about 81% more each month than they did just one year ago.
Still, there were some bright spots in the inflation report that could bode well for buyers in the housing market.